The European markets (VGK) have been an area of interest since Wednesday's strong bounce off of the blue diagonal resistance line set up by higher lows in October and November. Today we also had a breakthrough of another resistance line set up by highs in November and July. Next stop is a resistance line setup by highs in June and August at around $52.74.
The obvious culprit for this euphoria is a perceived bullish announcement by Draghi this Thursday that can lift both the Euro and markets. One must look at this announcement in context however and appreciate that the charts are indicating that it's effects may be only temporary. Although it may be bullish in the near-term VGK finds itself in a large ascending bearish wedge which is itself part of a large declining channel. At some point in the new year, and likely around the second red-dotted resistance line at $52.75 to $53.00, a second top in our wedge will go in when markets are reminded of the weak manufacturing sector, surplus inventories, and an increasingly depressing foreign picture.