The chart represents the relative performance of SP500 Indx over the Eurostoxx50 composite. The candles are set to Heiken Ashi to filter noise a bit.
For now we see the following signs:
- the ratio reached previous high (means SP500 outperformed) but Heiken Ashi candles signal that this performance may switch back in favour of Europe.
- The "Price" is still above the Kumo and Kijun Sen, but the lower horizontal line has become very important given that Kijun Sen and Senkou B stay together at same level
- Slow is on sell
- gives a sell signal, negative divergence persist since last top -> this may also indicate we had a in
Basically with increased possibility for a full from ECB and hawkish-like stance from FED the policy divergence itself also indicates that European equities can start performing better in the future.
Again, this doesn't mean being general or on equities. The spread (ratio) compression can happen both on a general bull or on a general bear market.