The recent collapse of markets may be key for European indexes

The latest stock market correction led most of the indexes to key support areas built up of diagonal horizons and, most importantly, 200SMA, whose value was highly relevant to investors. Yes, much of the indexes have reached 200SMA coupled with a few more backers, but with European indexes, things do not look that way.

If we take DAX30 as an example, we will see that the long trend is slowing down, and then breaks down the key levels of support - core diagonal, horizontally and 200SMA, whose breakthrough is done through a gauge in the downward direction - a very strong bearish signal. As a result, unlike the US indices, the DAX30 along with the other two major indexes remained "in the air" supported only by the horizontal support level + 38.2% Fibonacci correction of the last wave.

CAC40 chart

UK100 chart

What does this mean for European stocks?

If we combine the foundation and the technique, taking into account the strong euro and the forthcoming abolition of QE, the European markets do not expect anything good. In this case, investors will prefer the US and Asian markets for their investments, as in the US tax reform is behind the profits of many companies, and under normal market conditions, appetite is exaggerated and investment in Asia is rising. At the same time, Europe has a strong euro and has yet to remove QE, which is key to a large number of companies.

Jr Trader Petar Milanov

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