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FTSE MIB Index Selling Pressure Continues

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FTSE MIB index has fallen for a fifth day out of the last six, and became more bearish after breaking below the strong support zone of 20110 – 20235 ahead of some significant data out of Italy this week, including CPI, Trade Balance, Retail Sales and Unemployment Rate.

The index looks very bearish as it failed to form a higher top above the all-time highs of 22570. This enabled the index to remain below the 50-period SMA and the 200-period SMA on the daily chart as well as below the ascending trend line, which stared back in June 2012. The weakness is also confirmed by our medium-term studies, since the MACD remains in negative territory and the RSI is following a downward path. In addition to this, the stochastic oscillator has dropped below 50, after finding resistance at the 80 level, which all of them are bearish.

Therefore, as it stands, if the bears manage to drive the battle lower, then I would expect the price to challenge the 18790 level. A decisive dip below that barrier, could also add further pressure on the strong support level at 18300 and thus, would open the way towards the key support level of 17750. On the other hand, if the bulls are strong enough to push the price further up, I would expect extensions towards the strong resistance zone of 20110 – 20235, which includes the 50-period SMA.

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