Technical Update - Top and reversal pattern in DAX. Stoxx50 testing support
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: Top and reversal scenario unfolding in DAX. EuroStoxx50 testing key support after hitting Fibonacci resistance
The short-term corrective uptrend could have come to an end. The Index has formed a Doji Evening Star like pattern indicating top and reversal is in place. The Doji Star is almost spot on the 0.764 Fibonacci retracement of the April through May down trend.
This despite RSI is in bullish sentiment after closing above 60 threshold when forming the Doji. For DAX to demolish the top and reversal pattern a close above 14,590 is needed, however. If that scenario plays out DAX could test 14,952 strong resistance.
A daily close below 14,226 followed by a close below short-term rising trend line sellers are likely gain extra power resuming bear trend.
EuroStoxx50 doesn’t seem to be able to hold on above the 0,618 Fibonacci retracement at around 3,835 testing support at around 3,752.
RSI is still in bearish sentiment and if Stoxx50 closes below 3,752 and below rising trend line sellers are likely to get a second wind pushing the Index towards 3,630 support but quite possible lower.
A close above 3,853 Stoxx50 is likely to continue its short term corrective uptrend to the 0,764 Fibo retracement at around 3,907
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