"Whilst listening to Friday's audio I was surprised to hear you open with the comment "It's been pretty good week for just about every stock market". You then went on to say that "most of the European markets eased a wee bit towards the close".

"Having been following events throughout the day, I am somewhat confused by your commentary and also by the charts, as many of the European stock markets seem to have printed key day reversals, with the DAX's in particular appearing to be a big fat one.

"Prices rose overnight on the back of Asian stock markets, presumably excited by Japan's intervention earlier in the week, but then profit taking commenced quite early in the day and was driven further by disappointing numbers from the University of Michigan Confidence Index. Interestingly the sell off continued moving the market down further, closing the 'gap up' that had been left unclosed from the beginning of the week. I note also that Friday was an option expiry day, quadruple witching if I'm not mistaken. With all this going on, some volatility was to be expected I suppose.

"My observations arise because of a trading decision that I need to make!

"Noting your recent comments about western stock markets that are geared to global growth, I find myself with a nicely profitable leveraged position in the DAX. However, following Friday's sell off, I am not sure whether to view this as a signal to lighten my position or whether to regard it as a buying opportunity through which to add to my trade.

"I'm confused because I'm not sure whether is this a case of Germany leading the western stock markets up and now leading them down? (albeit within a trading range). Or whether Friday was just a bit of an anomaly caused by options expiring, with no rebounding futures activity after the European close on account of it being a Friday?

"During the chart seminar we learned that, a key day reversal generally needs to be confirmed by follow through. However I have observed that in your personal trading you will sometimes exercise caution by closing a position when it becomes obvious that a key day reversal is developing. If my memory serves me correctly, this is what you did with gold back in June.

"Whilst recognising that such trading decisions are often subjective personal matters, I hope you will be understanding of my dilemma and able to comment on the situation, perhaps in the light of Monday's market action."

David Fuller's view Thanks for an observant, detailed and knowledgeable email.

It was I who was confused, not you, or at least I was not as observant as you were. I mostly review charts late in the morning, usually in discussion with Eoin. Thereafter I try to keep an eye on what is going on throughout the day, in addition to reading, writing and other related work. Friday was indeed a 'triple witching' day and I was watching US prices more closely and missed the volatility in Europe.

I will try to make up for this oversight by assessing the European moves.

The keys shown by DAX, UKX and some other European stock market indices were certainly a warning, not least as they also occurred near the higher side of ranges where resistance had been encountered previously, and also against the background of short-term overbought conditions. However you are correct in saying that we generally prefer to see some follow through for keys, to confirm the short-term signal. This has not occurred today as global stock market firmness has enabled the European indices to all but countermand Friday's key day signals.

Consequently, I would be less concerned about them unless prices fall back and close beneath the inter-day lows established by Friday's key day reversals. Overall, I maintain that the ranging patterns shown by these weekly charts for DAX, UKX and most other European stock markets are shaping up as continuation rather than reversal formations. Additionally, many Asian and South American indices have provided a bullish lead in recent months.