European equity markets drifted lower on Friday, following a global trend after mounting virus-related fears hit sentiment at the end of the week. The recent market euphoria fed by further stimulus plans and corporate results, peaked on Thursday as Joe Biden’s inauguration as President pushed US markets to record highs. Following that it seems most investors now feel the party is over and are back to the reality of the pandemic, after the situation worsened in many countries.
Technically speaking, this return to the “risk-off” mood can be seen on most charts as a “bull-trap” situation yesterday, after many benchmarks briefly edged higher than their major resistance level before collapsing again inside their short-term consolidation patterns.
Even if the market correction is sharp, there is no real threat to the long-term bullish trend as no major supports have been broken yet. Investors may be tempted to put the rally on hold by taking some profit ahead of the weekend, but the lack of a strong bullish market reaction next week could lead prices to a deeper correction.