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Elliot Wave Analysis for EURO STOXX 50
Euro Stoxx 50, is the stock market index of the Eurozone, which is traded on EUREX. Designed by the Deutsche Börse Group, represents the 50 most large and most liquid stocks from the top industry sectors in Eurozone. It was introduced in 1998 and is available in many currencies, like EUR, USD, JPY, CAD, and GBP. It is the one of most liquid indices, due to its in–and–out process for the most liquid stocks, according to their performance. It is used also, as a benchmark and underlying asset, for many financial instruments, like options, futures, mutual funds, and ETFs, as the S&P 500 in the United States does.
Monthly Range: Higher in wave V
The monthly chart (log scale) above, shows us the big picture since 1987. It’s pretty obvious to see a huge uptrend, as a labeled wave III at the beginning of 2000, and like all global indices, after that, they experienced two consecutive crises, that of dot.com and of the bubble of Real Estate in the U.S with the bankruptcy of Lehman Brothers. In our chart, those crises are labeled as wave ((A)) and wave ((C)), respectively. So, after 2009, the index couldn’t reach again the all-time highs of 2000, and it entered a contracting triangle, labeled as IV, which has ended already, making the 5-wave sequence formation as all triangles do.
We are sure about the end of wave IV, because, after the completion of the ((E)) wave of IV, the market went up and broke the upper trendline of this triangle. This is always a sign to trade long, because the ensuing wave V, is on the move, constructing its subdivision waves. So far, the point of ‘’pain’’ is at the end of ((E)), at 2302,84 points. That being said, we can estimate our risk/ratio with this point, as a reference point.
Weekly Range: Higher in wave (3) of ((3)) of V
We said previously that, after the breaking of the upper trendline of a triangle we can trade long. But, for accuracy, don’t be ever in a hurry. We need to be careful and to see more closer the retracement after this break. Looking at the weekly chart (log scale) above, we have already labeled the subdivision waves of V. Before the break of the triangle’s trendline, we have the ((1)) and the ((2)) of V. Thereinafter, we can observe a (1) and a (2) of lesser degree. They were labeled as a subdivided wave of ((3)), just because the retracement has entered the territory of ((1)), thus it couldn’t be counting ((1)), ((2)), ((3)) and ((4)).
Of course, the explanation of this overlapping, would justify the existence of an ending diagonal for this fifth wave, V. But the question is that the price and time action of III, is justifying a so short, in all aspects, V? We definitely say, NO.
Daily Range: Higher in wave (3) of ((3)) of V
Having said that, on the daily chart (log scale), except for this overlapping of (2) in the territory of ((1)), and the reference point of the end of ((E)), we noted another one point of ‘’pain’’. That of the lower low till now, at 3387 points, within the (2). The market has already declined more than 61,8% of (1), and the next Fibonacci retracement level – 78,6% of (1) -, is at 3270,54 points. Moreover, the end of ((2)) is at 2928,56 points.
The index must keep, first of all, the Fibonacci retracement levels, because we see at the left side, big support from the end of ((1)), and the new (2) will have form a clear 3-wave mode, like a zig-zag, which is an acceptable pattern for second waves.
See More Analysis For Global Indices, Section 1: http://tradezign.com/category/section-1
