Greek Composite Index Weekly Review 15 Nov

The Greek Stock Market had a rather quiet week shown in the Composite Index weekly graph, where the red candlestick opened at 1515 and closed at 1497. The long term downtrend of the Greek market seems to have lost speed and we have seemingly entered a consolidation period, proven by the strong support level found at about 1500 points. However the continuous lowest highs in the weekly graph are worrying and in combination with the announcing of economic reports this week, I won’t be surprised at all if the support level is overcome with a large falling candlestick. Yet there is hope for a trend reversal in the daily graph.

The Greek Composite Index has been going south during 2008 losing more than 70% of its value. During 2009 there was a major candlestick continuation formation and in mid-2010 the index tried to bounce back but has obviously failed to. Now the question remains whether the support level verified at the monthly graph can sustain the pressure.

As the commissions of trading in the Greek market are around 10-fold the commissions usually charged in the US stock market, I’m not looking into short term trading. That is why I keep on watching and analyzing the monthly, weekly and daily charts in order to find encouraging signals for a trade. If I was to short sell any Greek stock at the moment, I would wait for a support level breakout. Fuelling by the bad economic news right around the corner, the downtrend could be proven very profitable.

Since I can only buy stocks in the Greek stock market, I’m attempting to find opportunities to enter long. Upon looking at the daily chart of the Composite Index, I can point out 3 major support levels that are climbing. First the support level at 1400 being the most crucial one must hold up, given there was an important reversal candlestick pattern in June. Then came the support level at about 1430 and more recently the support level at 1450. However the index has been drifting downwards since August with continuous lower lows and lower highs. Should we expect a breakout below 1450 or lower, or would the price bounce off the level there and enter a short term uptrend up to 1800?

We could buy some stocks on Monday if the index overcomes the Friday candlestick’s high. The long bottom wicks of the recent candlesticks could mean the buyers are making their best of taking control of the market. Nonetheless we may well enter long in a strong downtrend and get trapped, so we need to set tight stop losses, perhaps right below the previous candlestick’s low. Additionally we should be looking to exit our long position the instant we see a bad sign in the stock graphs. Otherwise we could end up giving back all of our profits and even more!