Looking at the monthly chart of IBEX 35, we can see the severe slide after the index tested the 10099 area in February, but fell shy of a few points from testing the long-term tentative downside resistance line drawn from the peak of 2014. Today, the price managed to hit and overshoot the lowest point of 2012, at 5899 level. This month, IBEX 35 already made the biggest monthly loss in its history, falling slightly more than 35%. We will continue targeting the downside, at least for now, however if we see a monthly close above the previously-mentioned 5899 zone, this could lead the index for a possible correction higher first, before another leg of selling.
As mentioned above, if the price stays above that 5899 hurdle at the end of the month, there could be a bigger likelihood that the index could go for a bit of correction to the upside. IBEX 35 might drift back up, closer to the 6711 barrier, marked by the closing and opening levels of July and August 2012. If the index struggles to bypass that territory, the bears may take advantage of the higher price and drive it lower again. If such a move happens, we will aim for the previously-discussed 5899 zone again, a break of which could open the door for a move to the 5448 area, or even to the 5267 level, marked by the lowest point of 2002.
Our oscillators, the RSI and the MACD, continue to point lower. In addition to that, the RSI is below 50 and very close to 20. The MACD has just fallen below its trigger line again, after getting back above it in April of last year. Both indicators seem to be favouring the downside scenario, at least for a while more.
On the other hand, if the price suddenly breaks the previously-mentioned 6711 hurdle and continues to move higher, resulting in a break of the 7365 barrier, which is the lowest point of 2016, this may attract even more buyers into the game, who may help push IBEX 35 for a larger correction. That’s when we will target the 8280 obstacle, a break of which could put the 9012 level back on the radar. This level is marked by the high of this month.
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