Technical Update - DAX forming top and reversal pattern. EuroStoxx 50 rejected at strong resistance
Kim Cramer Larsson
Technical Analyst, Saxo Bank
DAX formed top and reversal pattern indicating uptrend could be over.
EuroStoxx50 rejected at strong resistance and could resume downtrend
DAX has broken bearish out of its rising wedge like pattern after forming a Doji Evening like pattern (circled). If DAX closes below the medium-term falling trendline the Index is set for lower levels. That picture would be supported if RSI closes below its rising trendline. RSI is still showing positive sentiment however.
A close below key support at around 12.927 is likely to fuel a sell-off down to the 0.618 retracement of the October uptrend at 12,466.
For DAX to extend the uptrend a close above 13,444 is needed but even if that plays out there is strong resistance ahead around 13,565 and 13,947.
EuroStoxx50 has been rejected at resistance around 3,683 opening today below its steep rising trendline. If Euro Stoxx cannot close the opening gap selling pressure is likely to push the Index to support at 3,518. If Euro Stoxx moves below its 55 SMA next key support is at around 3,420.
For EuroStoxx to extend its short-term uptrend a close above 3,683 is needed for a move to 3,800.
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