Eurostoxx 50

Round Up

Published 26th January 2018 & validated 15th March 2018

Our big picture puts the  Eurostoxx 50 index inside a secular bull market. Nevertheless, we expect a significant correction nearby. It will correct the +40% rally, which started in February 2016. The question is not if it happens but when it happens.

Market Pulse

Published 15th March 2018 13:00 GMT

Not much can be added to the past updates. The 17-year trendline (depicted as the red descending line) remains a key level. The market stalled from there as we expected. A short-term trading opportunity arises if the Eurostoxx 50 crosses above that line. It currently runs just below 3,450 points.

We continue to see the Eurostoxx higher than today’s level regardless of its exact path for the weeks ahead.

Published 12th March 2018 9:55 GMT

We have stressed the importance of the Eurostoxx 50 17-year trendline support/resistance repeatedly. The most liquid European index is once more approaching this level. It is likely that the rally stalls around there for a short while. Eventually, the pattern is likely to resolve North of 3,500 points short term. A more detailed reasoning can be found at our “Catch Of The Week” section:

Published 8th March 2018 13:00 GMT

The drop in the Eurostoxx 50 over the past weeks counts as an irregular flat, which forms minute wave iv(circle). The subsequent wave structure from the February 2018 low counts as an impulse to the upside. The latest drop, which did not confirm the DAX low, can be counted again as an irregular flat pattern.

Alternatively, the entire wave structure extends further to the downside. The only possibility for an interim top in November 2017 is a leading diagonal. This scenario is highlighted in red. Another leg down makes this scenario a clearer double-three opening for the structure

We assess slightly higher odds to the black scenario. Both versions imply a sharp rally well above 3,500 points within the next weeks. Our exact interpretation of that is described in the “short-term” section further below.  

Short-Term Eurostoxx Elliott Wave Analysis

Published 12th February 2018

Our Eurostoxx 50 Elliott wave analysis concludes two plausible scenarios. The base case forecast is that the market resumes its trend to the upside in a final minute wave v(circle). It is likely that the last swing to the upside, labeled as minute wave v(circle), started off 12th of February 2018 lows. The best alternative scenario is an interim top that has been reached at the end of January 2018.

Aggregate wave action in the Eurostoxx 50 post the French election in 2017 can be characterized as choppy and sideways. Moreover, the swing to the downside from the January 2018 top counts as a clear three wave move. Last but not least, the paramount trend is to the upside. Evidence adds up on the positive side, which makes a spike into a new high as part of the black count likely.

Alternatively, we’re looking at an interim top scenario within the red count. This is the only way of forming an interim orthodox top within the Elliott wave framework. The conclusion arises from the three-wave drop off January’s high. However, even the alternative scenario, depicted in red, implies some big countertrend retracements. These implications are backed up by Elliott’s guidelines regarding sub-waves of diagonals as well as post diagonal retracements.

Hence our conclusion remains: Either higher highs or decent levels for unwinding long positions are ahead for the Eurostoxx 50. 

Medium Term Eurostoxx Elliott Wave Analysis

Published 5th February 2018

The Eurostoxx 50 is hugging a 17y downward trendline. This picture is similar to other European indices such as CAC40 and IBEX35. A confirmed breakout situation of all three indices would be a strong bullish signal.

Moreover, a 17y lasting trendline seems so significant that the subsequent minor wave 2 should bring price levels again to this trendline before a breakout confirmation begins. The subsequent breakout should be very strong and quickly bring the Eurostoxx 50 closer to its all time high.

There is a difference to the cycle wave IV in the Eurostoxx 50 to other European indices such as Dax and CAC40 if our analysis is correct. The medium term wave structure looks in the Eurostoxx 50 like a zig zag in cycle wave IV as opposed to contracting triangles in the Dax and CAC 40. This would mean that the European index is a bit ahead in terms of wave structure.

Technical Analysis