European Stocks Poised for Major 2026 Rally, But Key Levels Must Fall First

European stock markets are counting down the final hours of the year with thin trading volumes and little movement, leaving the technical stage set for what could be a pivotal start to the new year.

Indeed, 2026 promises a new bullish leg for the continent, with potential gains of 10% to 20%, according to technical analyst and strategist Joan Cabrero. He says this potential is viable if key resistance levels for Germany’s DAX and France’s CAC 40 give way in tandem.

“Afterward, as almost always happens after major breakouts, the scare will come, the correction, the reminder that no market goes up in a straight line, but until then, the after-hours is still open and it’s worth enjoying it, without ever losing sight of the exit,” the strategist noted in his final commentary of the year.

Both indices are currently locked in a wide sideways pattern, reflecting a near-perfect balance between supply and demand. “These processes are not usually symptoms of weakness, but of an accumulation of energy,” Cabrero detailed.

“If this pattern resolves to the upside, as is common when the preceding trend is bullish, the scenario for 2026 would open the door to a 10% rise for the German index to 26,500 points, and up to 20% for the French market, targeting the 10,000-point mark—a level with both psychological and technical significance.”

Spain’s Ibex 35, meanwhile, is looking to start the year by holding above the psychological resistance of 17,000 points. A move that would reinforce the dominant bullish bias and “is anything but a sign of weakness,” the analyst stated.

From a technical standpoint, it would not be surprising to see the Spanish benchmark seek support along its accelerating uptrend line, which runs through the 16,200 to 16,175 point zone. “An adjustment of this type would fit perfectly within a long-term bullish structure and would, in fact, be the minimum to expect before considering new purchases with a greater margin of safety,” he said, adding that the first short-term signs of buyer exhaustion would appear if the index closed below 16,850 points.

Tuesday’s session also marks the end of the trading year for several regional markets, including the German DAX, which will remain closed tomorrow.

Precious Metals in the Spotlight

The word “historic” has been frequently used to describe the equity market’s performance in 2025. For precious metals, however, the term is a perfect fit. The outstanding returns accumulated by many of these commodities are unparalleled in the last 50 years, and they remain a primary focus for investors in the final days of the year.

This focus has stirred some last-minute volatility. Silver regained ground on Tuesday after plunging as much as 9% during Monday’s session. The metal’s sell-off followed a historic rally fueled by speculative trading and fears of a supply shortage.

Gold also climbed more than half a percent, recovering from a drop of over 4% at the start of the week. Beyond precious metals, copper is on track for its longest winning streak since 2017, following a December rally driven by the prospect of increased supply chain stress.