The Euro Stoxx 50 climbs 5.0 points or 0.13% reaching at 3,765.2 pts., FTSE MIB 40 surges 20 pts or 0.08% touching at 23,788 pts., Ibex 35 gains 1.0 pts or 0.01% touching at 9,512.7 pts.
The European stock market advances modestly on Thursday after the "phase one" deal agreement. However, the tariffs of some Chinese products would be removed depending on the progress on the "phase two" negotiations.
The U.S. President Donald Trump qualified the agreement signed between the two world's largest economies on Wednesday as a "great deal for both countries."
Some analysts showed confidence about this advance in the commercial relations between the U.S. and China. However, they still are expectant for the start of "phase two" kick-off negotiations.
Technical Overview
The FTSE MIB 40 in its daily chart exposes the upward movement developed by the Italian index in three segments. The ascending move could correspond to an ending diagonal in progress.
According to the Elliott wave theory, the ending diagonal pattern is a motive wave built with five overlapped segments that follow a 3-3-3-3-3 internal sequence.
The current bullish sequence began on the Christmas rally of 2018 at 17,910 points. The first bullish leg looks like a five-wave move that ended at 22,051 pts.
The second segment has the configuration of an irregular flat (3--3-5), which completed its structure at 19,936 points in mid-August 2019.
Once the second segment ended, the FTSE MIB 40 started a new five-wave sequence, which still is active and touched a high at 24,151 pts on January 10th, 2020.
In consequence, according to the long-term structure and its internal sequence subdivided by a 5-3-5 path, the Italian index advances in a zigzag pattern.
Following the sequence of an ending diagonal pattern, FTSE MIB 40 should develop a decline in three segments. Likely, this drop does not be below the 19,9366 pts. Once finished with this bearish leg, the Italian index should make a new bullish path that could surpass the 24,151 pts.
The following chart corresponds to the FTSE MIB in its 8-hour timeframe. The price action reveals that the bullish trend remains intact while the Italian index keeps above the 22,602 points.
In conclusion, the Italian index FTSE MIB 40 currently runs in the fifth movement of a bullish five-wave sequence. This situation makes us maintain a neutral position, seeking a long-term positioning in the buy-side.
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