IBEX 35 index holds an inverse head and shoulders formation in the near term.
The IBEX 35 index (Spain 35) has been developing within an inverse head and shoulders pattern over the last three months with the head at more than two-year low of 8277 and neckline the 9230 resistance level. Currently, the price is testing the upper band of the long-term downward sloping channel and seems to be ready for a jump above both formations, starting a new bullish rally in the daily timeframe.
Zooming to the technical indicators, the MACD oscillator is in progress to post a bullish crossover with the red trigger line, while the RSI is sloping upwards in the positive area.
Immediate resistance is coming from the neckline around 9230, while slightly above this significant region, the 200-day simple moving average (SMA), currently at 9322, could be the next target for investors to look for. A potential upside violation of this level too would drive the index towards the 38.2% Fibonacci retracement level of the down leg from 11192 to 8277 around 9392 before touching the 9663 resistance.
On the flipside, if the bears retake control and drive the price lower again, the price would flirt with the 23.6% Fibonacci of 8966. Should prices decline, the 40-SMA near 8868 could attract some attention ahead of the 8620 support barrier.
In the long-term, the index is advancing above the downward sloping channel, while the short-term inverse head and shoulders pattern maintains the neutral bias until a daily close above the neckline.
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