Technical Analyst, Saxo Bank Group
Summary: AEX25 moving higher closing in on strong resistance level
Frontrunner BEL20 seems to have hit strong resistance, can it break it?
CAC40 closed Friday above key resistance eyeing 7.000
AEX25 has moved higher after closing above key resistance at 715. Next resistance at 741. A close above will pave the way to 772-773 which is around the 1.618 Projection of the December correction.
To reverse this uptrend a close below 688 is needed.
BEL20 is close to be testing key strong resistance at around 3,875. If BEL 20 fails to close above a correction could be seen. RSI also needs to close above December peak i.e., above the horizontal line to gain further momentum.
If BEL20 closes above 3,875 and RSI closes above the line 4K could be tested in January.
If BEL2 is being hit by selling pushing the index below the 200 daily SMA the Index could be stuck in range between 3,600 and 3,800. With the 200 daily SMA declining and the 55 SMA and 21 SMA rising there seems to be at tug of war between the longer-term and the medium-/short-term sentiment.
CAC40 closed Friday above key resistance at 6,829. Despite still diverge4nce on RSI there is likely more upside to 7K which is around the 1.382 Fibonacci projection of the December correction.
An RSI close above its upper falling trendline will confirm this scenario.
For this bullish scenario to be reversed a close below 6,388 is needed. First indication of this to play out would be a close below 6,641
RSI divergence: When instrument 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.
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