European shares were little changed on Tuesday with this week’s consolidation phase continuing ahead of tomorrow’s Fed meeting. Even if the strong bullish pace on equity markets slowed significantly this week, the lack of sharp downside corrections prevents the current trend from being really threatened. This lateral tone in the very short-term is more seen as the mark of a market pause than a sign of hesitation from traders. Of course, most investors will need further evidence of a quick recovery before increasing their exposure and driving prices to fresh highs. However, the current technical configuration tells us there is a certain degree of market confidence towards improving economic condition on a short to mid-term prospective, which currently keeps on sustaining prices.
The worst performing index this morning is Frankfurt’s DAX-30 Index, which is now trading below 12,700pts. Technically speaking the market is still trading inside the bullish channel that has been in place since early May so the short to mid-term trend remains bullish. However, the recent failure below 12,925pts could lead prices to a limited correction towards 12,560pts and 12,350pts by extension. Both moving averages are still rising, and the RSI indicator is not showing any sign of a trend invalidation yet, making the current bullish trend invalidation very unlikely today.
