Technical Analysis Article Iages_1_1024x768M Technical Analysis Article Iages_1_1024x768M Technical Analysis Article Iages_1_1024x768M

Will the Santa Claus rally continue in the new year? - European Equities

Equities 5 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

DAX bounced strongly off its important support at around 15.100 and followed through with moves above both the 200 and 55 Simple Moving Averages (SMA). There has been some consolidation around resistance at around 15.834.

The bounce from 15.100 has formed a double bottom like pattern and after the closing above 15.834 and the confirmation of and uptrend (higher highs and higher lows) there is potential to new All-time highs in the region of 16.425 and 16.600. RSI needs to close above 60 for further confirmation of the uptrend.
A close below 15.834 could see selling pressure down to 15.500 potentially lower.

DAX Jan22
Source: Saxo Group

CAC-40 bounced off the lower rising trend line around 6.750 jumping to new All-Time highs.
RSI above 60 with no divergence indicates higher levels going in to the new year are likely.

CAC40 Jan
Source: Saxo Group

AEX Amsterdam Index bounced off its 200 SMA and resumed the uptrend. Minor resistance at around 810. A close above and we are likely to see new All-Time highs.
A close below 788 could see the Index drop back to around the 200 SMA.

AEX Jan
Source: Saxo Group

The leading Belgian Stock Index BEL20 has experienced a strong bounce from the strong support at around 4.100. RSI is above 60 supporting the uptrend that is likely to t4st All-Time Highs in coming weeks. Support at 4.240.

BEL20 Jan
Source: Saxo Group

Contrary to most other Indices the leading Swiss stock Index SMI20 did not experience same selling pressure before Christmas. The Index is rising in what seems to be a rising wedge like pattern. However, if the uptrend continues with the Index breaking above the rising trend line the pattern which is a top and reversal pattern (but not yet confirmed) busted.
No divergence on RSI indicates higher levels in coming weeks. Strong support at around 12.411

SMI20 Jan
Source: Saxo Group

OMX C25 bounced strongly off support at around 1.800. (Big volatility on that day was due to Novo Nordisk). At the time of writing RSI is back above 60 and a close above confirms the uptrend that is likely to test all time highs. Some support at around 1.943 previous resistance level and 55 SMA.

 

Omxc25 Jan22
Source: Saxo Group
RSI Divergence explained: When an indicator such as RSI is displaying lower peaks while the underlying price is still making new highs. It is a sign of imbalance in the market, the strength of the trend is weakening. It could be an indicating of an ending of a trend. However, imbalances in financial markets can go on for quite some time. To cancel Divergence out RSI must either 1. Make a new high simultaneously with the price or 2. Close below 40 threshold. 

Same can be observed in bear market just here market makes a new low but Indicator doesn’t.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.