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Technical Update -Uptrend to continue in AEX25, BEL20 & CAC40 but expect a correction soon

Equities 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  Stock Indices in Europe have experienced a strong start to the new year with only one down day since December. There is room for further upside but trends do start to look a bit stretched. A correction should be expected this week.



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AEX25
has closed above key resistance at 741 and seems set for higher levels. Despite the new highs RSI hasn’t broken above the divergence level (horizontal line on RSI indicator) which is a bit of a worry. However, the trend is up and there is no resistance until around 772. But do expect some minor corrections.
A close below 724 will neutralize the uptrend and could be a signal of a larger correction to unfold.



AEX25 d 16jan
Source all charts and data: Saxo Group
BEL20 closed above key resistance at 3,875 last week supported by higher levels on RSI and no divergence which indicates BEL20 is likely to move higher to test next resistance at around 4,012. A spike up to take out 4K followed by a correction is in the cards.
A close below 3,831 is likely to reverse the short-term uptrend

BEL20 d 16jan

CAC40 has experienced a strong uptrend reaching 1.382 projection of the December correction and taking out 7K. But there could be more upside in the cards for CAC40. ´RSI is bullish and with no divergence indicating higher levels. A move up to minor resistance area around 7,092-7,155 seems likely. However, do expect a correction to kick in shortly but short-term uptrend is intact as long as CAC doesn’t close below 6,829

CAC40 d 16jan

RSI divergence: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend

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