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Technical Update - EuroStoxx50 and DAX uptrend stretched. Correction time?

Equities 3 minutes to read
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  EuroStoxx50 / EU50 cfd and DAX / GEr40 cfd seem ripe for a correction following a strong rebound off lows. Trend is bullish with potential to move higher towards end of the year

EuroStoxx50 is close to be testing the resistance at around 4,384-4,402. However, the bullish trend is quite stretched at illustrated by the flattening of the RSI indicator.

There is no RSI divergence however, indicating higher Index levels but a correction kicking within the next couple of days should be expected. Possibly down to around 4,300-4,270 . Strong support at around 4,234

If closing below 4,234 the bullish picture is likely to be demolished

stoxx50 d 2711
Source all charts and data: Saxo Group

EU50 cfd is close to be touching the 0.786 retracement at 4,383. The Index cfd is ripe for a minor correction likely down to around 4,350-4,250 area.

A close below 4,230 will demolish the bullish picture. A bullish picture with potential to previous peak at around 4,491. strong resistance at around 4,404

eu50 d 2711

DAX has broken above the key psychological level at 16K and is likely to test the resistance at around 16,060 shortly. A correction should be expected.
RSI is flattening indicating weakening of the trend, but not yet showing exhaustion mode meaning there is no divergence suggesting DAX will resume uptrend after a likely correction. A that could take the Index down to the 15,750-15,575. The latter is a strong support level.

A close above 16,060 will pave the road towards 16,500
dax d 2711

GER40 cfd is testing strong resistance at around 16,047.  If rejected GER40 could be hit by a sell-off/correction down to around 15,700-15,575 (strong support).

A close below 15,570 is likely to demolish the bullish trend
ger40 d 2711


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