Published 26th January 2018 & validated 16th July 2018
Our big picture assesses 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.
Published 16th July 2018
The past few days of trading have not brought any new evidence regarding the Eurostoxx 50. Therefore, the analysis further below remains fully valid.
Published 12th July 2018
There is a time to go long, there is a time to go short, and there is a time to go on vacation. Right now it’s time to go on vacation regarding European equity indices.
The Eurostoxx 50 index continues its price action in a complex manner. Our technical chart below remains perfectly valid. Odds are 50/50 between both scenarios at this stage. European equities could either swing into a final cyclical high or their cyclical high has been reached already. Therefore, it is more important to plan ahead and know what kind of action shifts odds either way.
We have to be patient in order to get more hints about the exact Eurostoxx Elliott wave pattern short-term. Fear of missing out must not stand in the way. A resolution to the upside will be most likely confirmed by another major European equity index. It will break important trend channels or important resistance levels. That kind of action will most likely provide some form of a more attractive risk/reward entry opportunity than we get right now. Similarly, a resolution to the downside post a cyclical top will most likely result into a recognizable motive wave. The Eurostoxx 50 is likely to resolve in an expanding leading diagonal in the bearish scenario. Those are typically followed by sizable second waves. That may provide a good entry opportunity for short speculative position for traders.
All in all, we are neutral on the Eurostoxx 50 as well as on the other major European indices right now. We prefer to stay on the sidelines and wait for better risk/reward opportunities.
We have published a broad overview of European equity indices on SeekingAlpha. It gives our big picture of what we expect for the major European indices during the next years.
Published 9th July 2018
The Eurostoxx 50 has transformed the drop from mid-June into a 3-wave pattern. This kind of action disappoints bears and adds further complexity to the paramount wave pattern. The red path could still work out but has to go via a leading diagonal or a complex b-wave.
All in all, the setup is slightly leaning towards more upside. However, bulls need to show some upside continuation to confirm that! The need to morph an impulse to the upside and break the orange downside trend subsequently.
Short-Term Eurostoxx Elliott Wave Analysis
Published 25th June 2018
The Eurostoxx 50 Elliott wave structure arrived at a critical junction. Either the European blue chips index extends further to the upside and completes a 5-wave sequence from the April low or it reached a cyclical top in autumn 2017.
The black scenario shows an extension to new recovery highs. In that case, the 17-year trend S/R (red line sloping down across chart) and the green trend up should not get broken. Moreover, a quick bounce above the horizontal black dotted line supports the black case. Such action would leave a corrective double zig-zag pattern from the May high on the charts.
The red scenario suggests a cyclical top last autumn. That scenario should develop strong momentum to the downside during the next few trading days. The market trades below the 17-year support already. A clean break of the green trend channel results in high odds for the red scenario.
Both scenarios are equally likely at this point. We are neutral on the Eurostoxx 50 and remain patient for signs of confirmation either way. The completion of a leading diagonal results often in a big bounce. Similarly, an immediate break of the 3462 figure with confirming action is likely to result into small double-digit gains on the upside.
Medium Term Eurostoxx Elliott Wave Analysis
Published 5th July 2018
The Eurostoxx 50 is struggling with a 17y downward trendline. The cycle degree triangle pattern is most likely incomplete as long as we record this situation. The European blue-chip index probably needs another down-up-down sequence into completion.
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.