The German stock market becomes the ‘cornerstone’ to see the long-awaited ‘Christmas rally’ in Europe

The consolidation of recent days has brought the EuroStoxx 50 closer to the base of the channel that has been limiting the upward trend for the last two years. The support of the 4,675/4,700 points It has stayed for a few moments of the week less than half a percentage point from being drilled. A situation that should be monitored since at these prices “you have to think more about buying than selling in the European stock market,” as Joan Cabrero, technical analyst and strategist at ecotrader.

“The only thing that bothers me is that The German DAX 40 is one step away from confirming a bearish pattern in the form of head and shoulders which would open the door to an additional fall of 4%,” says the expert from the investment strategies portal of elEconomista.essurely this pattern would be confirmed if he lost the 18,900 points.

“If the Ibex 35 could still fall to 10,900/11,130 points and the DAX 40 is heading to look for the September lows around 18,200 points, I am afraid that “The EuroStoxx 50 could end up looking for the August lows around 4,420/4,480 points”says the expert.

Of course, the loss of support for the DAX 40 and the subsequent additional fall of 4% would represent a magnificent opportunity to buy back into the European stock market with a much more attractive return/risk equation than weeks ago. “If we have that fall it is likely that we will have christmas rally“, says Cabrero.

The ‘push’ of the Ibex 35

The loss of the supports that had limited the consolidation during the last months has accentuated the threat of witnessing a larger consolidation in the Spanish equity market. “No one can be surprised that the Ibex 35 is giving up positions in the short term; in fact, in the worst case scenario, it could look for 10,900/11,000 pointsbut it remains to be seen if the intermediate support of 11,138 points, which are the September lows, manages to stop the fall.

“Operationally, if you ask me where I would be in favor of buying the Spanish stock market again, I would answer them to wait for the 10,900/11,138 points. If this fall were to take shape, I would be in favor of taking advantage of it to buy Christmas gifts since the bullish trend that has been guiding the increases from the 2022 lows runs through that range.

WhatsAppTwitterLinkedinBeloud