European market at near termed resistance

The iShares Europe 350 index ETF (IEV) broke its uptrend last year via a pattern that some might identify as a H&S Top. Call it what you wish–readers following my work know that I don’t get caught up in naming the patterns–the point is that the trend broke and a new low took out the old low. Support at $45 was taken out in late summer 2014 for this index. Recently, European markets have rallied on promises of USA-style QE and easy money stimulation policies. This type of policy can be good for markets, as we in North America know.

IEV

Currently, the European index, via the IEV ETF, is finding some resistance at its prior support level — around $45. Generally speaking, the intermediate termed momentum indicators MACD and RSI are trending up but not overbought. Thats a good sign. However, near termed momentum indicator Stochastics is overbought. Cumulative money flow (AD line at bottom of chart) is starting to move sideways. These signals suggest a pause, and probably near termed pullback for the index. But the internals are good – note also the relative strength of IEV vs. the US market index (S&P500) 3rd pane up from the bottom.

Monetary stimulation worked wonders to boost NA stock markets over the past 6 years. It will likely be a good thing for Europe as well. Long termed investors could either buy on a pullback–or, as an added step of caution, wait for $45 to be broken before stepping into this ETF.

 

Community talk on technical analysis with Keith Richards: Richmond Hill Central Library

1 Atkinson St, Richmond Hill, Ontario on Thursday April 16th 7:00PM

Keith will be speaking on how to “Win by not losing”: Using the power of technical analysis to profit in uncertain markets.

Keith on BNN Market Call Monday April 20, 2015 at 6:00 PM

Tune in to BNN Monday April 20th to catch me live on BNN’s 6:00 pm call-in show.

You can email questions now to [email protected] – (specify they are for Keith) or you can call in with questions during the show’s live taping between 6:00 and 7:00pm. The toll free number for questions is 1 855 326 6266

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4 Comments

  • My question is related to the Euro market versus the US market.
    You and others are predicting a pullback perhaps May/June time frame for the NA markets.
    Would such a pullback also affect the Euro market and specifically IEV? Point being is timing on any IEV purchase. You state long term investors could either… So if a pullback in IEV occured say later this month, would a long term investor buy then knowing that the NA market could have a pullback May/June? Or would we need to see a pullback in NA markets and IEV before entering IEV?
    Thanks

    Reply
    • There will certainly be influence by the NA markets on the IEV–so I would wait
      And the EU is oversold–it may rally, but hasn’t yet proven to be ready for a high confidence trade

      Reply
  • Greece is in the news again. What is your view on whether they will leave or stay?
    Plus what impact will it have on European ETFs and to what %?

    Reply
    • Please read my blog of 2 weeks ago called “European markets at near termed resistance”–do a search using that title on the blog

      Reply

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