Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
Technical Analyst, Saxo Bank Group
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
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)