is either offering a rare buying opportunity similar to 2011, or one last chance for the bulls to exit before the downtrend resumes.
The bearish case suggests that the Euro Stoxx 50 index peaked in April 2015 after completing a 2-year-long head and shoulder top, which was followed by the breakdown of the multi-year uptrend (2009-2015). According to this outlook, last few months' price action is a pullback to the broken trend line. Pullbacks are usually followed by the continuation of the dominant trend.
|
The bullish case suggests that the Euro Stoxx 50 index completed a 2-year-long head and shoulder top but found support at the lower boundary of a long-term trend channel. According to this outlook, last few months' price action is a a consolidation above trend line support (lower boundary of possible trend channel). Once the index completes the consolidation it can reverse and trend higher.
|
|
|
The daily scale chart shows the last 3 months' consolidation between 2550 and 2900. For the bullish case I will be looking for a breakout above 2900 levels. For the bearish case, a breakdown below 2550-2650 area will signal lower prices for the coming months.
|
|
