Technical Analyst, Saxo Bank
AEX25 uptrend is quite stretched, similar to other European indices. RSI showing divergence (see RSI divergence explained below) and the indicator has, at the time of writing, broken its rising trendline. It is a strong indication of a trend exhaustion short of the resistance at 736-741.
IF AEX breaks below its lower rising black trendline and closes below 700 a new down trend has been confirmed. A down trend that could take AEX down to around 680 i.e., around the 0.382 retracement level.
BEL20 has been showing divergence on RSO for quite some time. A correction down to strong support around 3,570 is in the cards.
A final exhaustive move to strong resistance area 3,740-7,767 is not unlikely, however. If BEL20 closes below 3,569 next support at 3,497
CAC40 is trading below its steep rising short-term uptrend. A close below is signalling a correction or trend reversal is likely. Similar to other European Indices CAC40 is showing divergence on RSI indicating trend exhaustion. Short-term down to test the support at 6,522 but if CAC closes below that level a sell-off down to around 6,200 is likely with support at 6,309.
If buyers should regain control and lift CAC40 above 6,730 the uptrend could be extended to 6,830.
RSI divergence: When 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
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.