Quarterly Outlook
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Jacob Falkencrone
Global Head of Investment Strategy
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Technical Update - EuroStoxx50 and DAX reversal patterns signal trouble ahead: Key levels to watch
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: GER40 and EU50 CFD's included in the analysis
EuroStoxx50 formed a bearish engulfing top and reversal candle yesterday, erasing the previous three days of gains.
Despite RSI not indicating uptrend exhaustion—there is no divergence on the values—the top and reversal pattern is fairly strong.
To invalidate this pattern and for EuroStoxx50 to resume and extend its bullish move, a daily close above yesterday’s peak at 4,987 is required.
EuroStoxx50 is now trading below support at around 4,907 and is likely to test key strong support at around 4,812 shortly.
The 200 daily Moving Average, currently around that level, will add to the support strength.
A daily close below 4,800 could lead to further selling, with no strong support until around 4,703.
Despite RSI not indicating uptrend exhaustion—there is no divergence on the values—the top and reversal pattern is fairly strong.
To invalidate this pattern and for EuroStoxx50 to resume and extend its bullish move, a daily close above yesterday’s peak at 4,987 is required.
EuroStoxx50 is now trading below support at around 4,907 and is likely to test key strong support at around 4,812 shortly.
The 200 daily Moving Average, currently around that level, will add to the support strength.
A daily close below 4,800 could lead to further selling, with no strong support until around 4,703.
EU50 CFD Levels:
Support at around 4,810, with potential to dip to the 0.382 retracement at 4,789.
Additional support at around 4,742.
To resume the bullish trend, a daily close above 4,987 is required.
Support at around 4,810, with potential to dip to the 0.382 retracement at 4,789.
Additional support at around 4,742.
To resume the bullish trend, a daily close above 4,987 is required.
The DAX Index formed yesterday a bearish engulfing top and reversal pattern, erasing the previous four days of gains to close yesterday on the support at around 18,748.
However, the Index gapped lower at the opening and could see further selling in the coming days and weeks towards the strong support around 18,236–18,183 and 17,884.
Despite RSI still showing positive sentiment and no sign of divergence, the Index is likely to have topped out. For the DAX to resume and extend the bullish move, a daily close above 18,991 is required. The first indication of that scenario playing out would be if the DAX can close back above 18,748.
However, the Index gapped lower at the opening and could see further selling in the coming days and weeks towards the strong support around 18,236–18,183 and 17,884.
Despite RSI still showing positive sentiment and no sign of divergence, the Index is likely to have topped out. For the DAX to resume and extend the bullish move, a daily close above 18,991 is required. The first indication of that scenario playing out would be if the DAX can close back above 18,748.
GER40 CFD Levels:
Support at around 18,210 and 17,948.
A daily close above 18,991 will see the bullish trend resume.
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