MIB Forecast April 22, 2016, Technical Analysis

In Italy, during the Thursday session we initially fell but turned right back around to form a bit of a bullish candle. It looks as if we are attacking the 19,200 level, an area that has been massively resistive previously. Ultimately, pullbacks at this point time should continue to offer buying opportunities as there is so much support below. On top of that, the most recent low was a “higher lows”, which means of trend is most certainly trying to change at this point in time. Italy seems to attract a lot of “hot money” so pay attention to the other European indices as this one will quite often move in the same direction as the DAX, the CAC, the AMX, and others around the continent. With that being the case, a lot of times this market actually moves quicker than them, because it is considered to be peripheral Europe.

The 18,000 level below should be massively supportive, so this point in time we suspect that pullbacks will fall a farther than that. A break above the 19,200 level should send this market looking for the 20,000 handle, and then of course above there as the 20,000 level is a major level on this chart as far as long-term time frames are concerned. We have seen quite a bit of support and resistance in this general vicinity of 20,000, so ultimately it will be attractive to traders in general.

There is a lot of noise between here and 19,200 or so, so having said that we will have to be very cautious and quite frankly might look to short-term time frames in order to start buying based upon supportive candles or even bounces. Ultimately, this is a market that will continue to react to France, Germany, and the Netherlands, as it is considered to be very dependent on the rest of Europe in general. The Euro fell during the session on Thursday, and that ultimately does quite a bit of good for this market, as it helps exports and of course makes stocks even cheaper to foreign investors.