Technical Analyst, Saxo Bank
Summary: RSI has warned about exhaustion of the uptrends in DAX and EuroStoxx50 for a several weeks. With DAX and EuroStoxx 50 breaking key supports this week they have now turned bearish.
Medium-term they have broken bearish out of rising wedge pattern. DAX could drop to around 14K. EuroStoxx50 3,800.
GER40 and EU50 cfd levels in the article
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DAX closed below key support at 14,906 yesterday and despite opening above this morning the Index is at the time of writing back below.
RSI divergence has been warning about uptrend exhaustion for several weeks
With RSI below 40 the downtrend is confirmed.
The Index is still above the lower part of the cloud on the daily chart, however (orange shaded area) at 14,725. And just above the 100 daily Moving average giving some support the Index.
however, the downtrend is confirmed and a move down to strong support at around 13,791 is in the cards. Some support at the at 14,403 and the 0.382 retracement at 14,238.
For this down trend to reverse a close above 15,706 is needed. Indications of this scenario to play out would be if DAX closes back above 55 MA followed by a close of the Gap.
Medium-term DAX formed a rising wedge like pattern which is has broken bearish out of with downside potential to around 14K. Weekly RSI divergence has been warning about uptrend exhaustion for some time
GER40 levels: Support at around 14,400 and 13,694. To neutralize the downtrend a close above 15,276 is needed. Above 15,707 it is reversed.
EuroStoxx 50 is testing support at around 4,025 and the lower part of the cloud at 4,012. 100 daily MA is providing support too. However, trend is down and a close below 4,012 is likely to fuel another sell off down to around 3,800.
A close above 4,189 will put Stoxx50 in neutral.
Medium-term similar to DAX EuroStoxx 50 formed a rising wedge like pattern which is has broken bearish out of with downside potential to around 3,800. 55 and 200 weekly MA will offer support around that level.
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