Technical Research – Euro Stoxx Index (3,429)
* Despite the deeper than expected correction in the Index we continue to believe that the move down from the 3,691-3,714 is corrective. Our view is based on several factors which include the medium term uptrend, the suggested Elliot wave count and the bullish monthly setup on the index. As long as the Index continues to trade above the July low at 3,291 we continue to view this retracement as corrective.
* The Index did break below the 200dma yesterday and closed at the lows of the day. The next support level is the open gap down to 3,420 and then the 76.4% Fibonacci Retracement at 3,291. Below 3,291 there is the rising channel support at 3,365-70. While a dip to the latter is possible the bulls want to see the index stabilize above 3,291 at least on a daily closing basis.
* On the upside, watch the 200dma at 3,463, a daily closing above it would be bullish. That being said it will be needed to see a close above 3,540-50 to argue for a low being in place.