Technical Analyst, Saxo Bank
Summary: Across the board European Equity Indices rebounded rebounded to test bear break out level only to get rejected. Selling pressure is back on. Most Indices are nearing support levels. Will they hold?
GER40 cfd (DAX) rebounded last week to test bearish break out level and 0.618 Fibonacci Retracement at around 15,723. Index got rejected and sellers returned pushing GER40 back below 200 SMA and is currently testing support around 15K.
A close below can further fuel sell off with a likely new trough below 14,800 .
As can be seen from the Weekly time period 14,800 seems to be the key support level. If breaking below there is not much support before around 13K.
A break below 14,800 will also confirm the double/triple top like formation.
FRA40 cfd (CAC40) got rejected at 7,150 which is just few points above the bear break out level in January (7,100). It is also the 0.618 Fibonacci retracement level of the entire January bear move.
FRA40 has formed what looks like a Doji Evening star formation indicating top and reversal. CAC is now back below the 55 SMA testing rising trend line going back to October 2021. If CAC takes out Friday low at 6,914 a re-test of strong support at around 6,750 is likely.
6,750 is key. If CAC 40 closes below it also closes below 200 SMA paving the way for further sell off down to around 6,400.
To reverse this (downwards pressure) picture CAC needs to close above 7,150.
Similarly to FRA40 the rebound in NETH25 (AEX Index) got rejected at the January bear break out level at around 770 pushing the price back below 200 SMA currently testing the 750 support.
A move below Friday low at around 741 is likely to further fuel sell off and the having another go at the 734 support but is likely to drop to around 711. To reverse this bearish picture NETH25 ne3eds to break above 725.
Rebound in BELG20 cfd (BEL20) ran out of steam already at around the 0.382 Fibonacci retracement level to test January lows. A close below next strong support is around 3,750
SWISS20 cfd (SMI20) is close to test 200 SMA and support at around 12K. A daily close below is likely to increase selling pressure and a test of January lows around 11,750. Below next support is at around 11,500
To reverse the current negative picture a close above 12,500 is needed.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.