Country risk of Italy – Equities – FTSE MIB 40 – Elliott Wave Forecast – Updated for May 25th, 2018.

This isn’t over.

 

In the previous article (inchcapital.com/The Inch Magazine) on the perspectives of the FTSE MIB 40 we had presented an overall picture of a long period that is bearish. We are in fact looking for the beginning of a descending long-term wave I classify as label (Y) destined to last at least 18 months and of which I propose below a clearer graphic expression.

 

FTSE MIB 40 – Monthly Candlestick Chart – Elliott Wave Forecast – Updated for May 25th, 2018.

The picture shows FTSE MIB 40's monthly candlestick chart with Elliott Wave Forecast highlighting a long-term bearisk perspectives

InchCapital Platform – FTSE MIB 40 – Monthly Candlestick Chart – Elliott Wave Forecast – Data Source Datalink

 

Subsequently for the principle of wave fractalization we descended the time scale to see when and how this dynamics could be activated. An immediate bullish reaction was required in order to re-elaborate the count that would immediately be realigned to the major structure highlighted in the monthly chart, ie descending.

 

FTSE MIB 40 – Elliott Wave Forecast – Daily closing 22.398,15 – Update May 25, 2018.

InchCapital Platform – FTSE MIB 40 – Daily Candlestick Chart – Elliott Wave Forecast – Data Source Datalink

 

The index is showing a clear bearish impulse that contrasts the equally evident bullish impulses recorded by the 10Y rates and the spread ITA-GER. Since these impulses are objectively the first to be detected at the same time with this dynamics and angulation, it is believed that we are at the beginning of an increased risk for the main Italian assets.

The dynamics of the FTSE MIB 40 index are ongoing and therefore still incomplete. I await the realization of new bottoms, because wave 3 is in extension. In other words, to close the first bearish part it is necessary to first note a rebound of at least two or three trading days and a further final and inertial bottom.

Therefore, even if you were to witness a short rebound, powered by emotional reactions, I do not think that the country risk of Italy could fall short.

The month of May is about to close its last week and the bearish targets still achievable are at 21.553 and 20.890. If the second target were to be reached emotionally during the next week, it is very likely that precisely from 20.890 can be detected a first bullish reaction.

On the other hand, the zone that is now opposed to any potential bullish reaction occurs for the next week between 23.140 and 23.285. Read More about InchCapital Platform – FTSE MIB 40 – May 25th, 2018

 

FTSE MIB 40 – Pattern Prediction for the next 20 trading days – Update May 25, 2018.

The picture shows the quantitative approach highlighting pattern prediction for the next 20 trading days

InchCapital Platform – Pattern Prediction for the next 20 trading days – May 25th, 2018

 

On the basis of Pattern Prediction the two bearish projections are in line with the dynamics of counting capable of closing the first bearish impulse that can be classified as wave 1 or A, while the two bullish reactions at twenty trading days seem excessive in terms of recovery.

Conclusions:

the intermarket dynamics highlight a country risk in progress destined to last over time either directly or alternately. I am ready to change my mind only with new tops above 24.544,26. Alternatively, in order to have less financial tensions of the Italian assets, it is necessary to record the end of the current bearish trend (still incomplete) and the subsequent recovery of a bullish phase supported by a compliant structure.