Technical Update - DAX, Euro Stoxx 50 and CAC 40 forming top and reversal patterns breaking rising trendline. AEX 25 close to confirm downtrend
Kim Cramer Larsson
Technical Analyst, Saxo Bank
DAX opened yesterday higher close to the falling trendline and sellers took immediate control which resulted in a top and reversal candle; Bearish Engulfing taking out the past four days of gain.
At the close DAX broke bearish out of the rising wedge like pattern it has formed over the past 4 weeks.
There has been no divergence on RSI, however but for DAX to cancel the top and reversal picture it needs to close above 13,947. If that situation occurs DAX could move to around the 200 SMA.
If DAX closes below 13,455 downtrend has been confirmed. A down trend that is likely to accelerate if DAX moves below the 55 SMA.
Some support at 13,353 and at around 12,985.
The falling trend where DAX was rejected is better seen on the weekly chart. At the time of writing the current weekly candle is forming a Bearish Engulfing (opened higher than last weeks close and current close/last trade is below last week’s open price).If the is also the picture after the close of Friday down trend is likely to resume. A down trend that can be fueled if DAX closes the week below 13,564
Euro Stoxx 50 broke bearish out of its rising channel and formed a Bearish Engulfing similar to DAX. A top seems to be in place despite no RSI divergence. IF Euro Stoxx closes below 3,694 the down trend is confirmed. A down trend that can take the Index to test key level at around 3,582.
To cancel this top and reversal scenario a close above 3,819 is needed
CAC 40 has been rejected at the 200 SMA and the resistance at 6,593 forming a Bearish Engulfing yesterday – a top and reversal signal. A close below 6,449 will confirm a downtrend.
To reverse this top and reversal scenario a close above 6,609 is needed
AEX 25 is still caught in a tight range between 712 and 736. A breakout is needed for direction. However, with divergence on RSI indicates the break out is to be to the down side.
IF that scenario plays out AEX will find some support at 696 and strong support at 672
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