This week the FTSE neared a 14-year high, boosted by investor’s excitement over the possibility of multiple mergers involving companies such as: Smith & Nephew, Stryker, Weir Group, and Mesto. Meanwhile, the DAX demonstrated a slight pullback from the record high close above 9,939 earlier in the week. Investors are exhibiting slight caution ahead of next week’s ECB meeting.

The current ratio for the two indices, at 0.6925, having moved down to a key support level before bouncing higher. Joe also notes that a buy signal has been triggered by the fact that the ratio has moved out and back into the Bollinger band.

Joe is expecting to see around 2 percent gain from the trade. His target level is 0.7065 from the current level of 0.6925. A stop can be placed around 0.6875.

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