The Spanish index Ibex 35 is running inside a long-term consolidation structure. In this analysis, we review the index sequence and how it can reach the previous highs reached in 2008.
The Big Picture
On the Ibex 35 monthly chart, we observe that it made five clear motive waves. The complete cycle started from 1,862.20 pts in October 1992 to November 2007, when the Spanish Index reached 16,040.40 pts. After this move, the price started a corrective sequence as an A-B-C pattern easing to 5,905.30 pts in July 2012. This way, the Ibex 35 completed a cycle with its five impulsive waves and its three corrective waves.
Looking at the Elliott Wave Theory
On the weekly chart, we observe that from the last bottom touched in 2012, it started a new cycle which topped at 11,884.60 pts. The classical Elliott Wave Theory says that the price could make a new high inside the triangle. After this move, when the price retraces, the bearish move could fail and continue its movement following the previous trend. In the Ibex 35 case, we expect a bullish continuation.
Our Long-Term Outlook
In the first instance, we expect a short-term bullish continuation to the area between 10,314 to 10,709 pts. From this area, the Spanish index could start a corrective sequence in three waves with a potential target area between 9,130 to 8.869 pts. Once is activated its failure structure, our vision will be placed in the area between 13,553 to 15,187 pts, raising over its 2008 highs.
The invalidation level for this structure is 7,579.8 pts. If in any case, the price drops and close below the invalidation level, we should expect a second bearish leg with a potential target in the 6,880 pts area.