Technical Update - DAX and Euro Stoxx 50 uptrend seems to be weakening. Will we see a correction?
Kim Cramer Larsson
Technical Analyst, Saxo Bank
DAX closed above key resistance at 13,761. Trading around the 0.618 retracement and just below falling (black) trendline which will act as a resistance. If closing above DAX is likely to jump to test the 0.7645 retracement at 14,162 and possibly also the 200 (red) SMA.
The trend is still up. However, DAX is forming what looks like at rising wedge like pattern. If DAX breaks bearish out of the wedge i.e., closes below the lower rising trend line it is a strong indication of a reversal/correction of the uptrend. A close below 13,455 will confirm that scenario and selling pressure to increase.
There is divergence on RSI (RSI values has not risen with the higher closing prices on DAX) which is an indication of a weakening of the uptrend. If RSI closes below its lower rising trendline it is a strong indication of a trend reversal/correction
Euro Stoxx 50 is trading in what appears to be a rising channel closing in on resistance at 3,857. To reverse the uptrend a close below 3,694 is needed. If that scenario plays out 3,600 is key support.
Divergence on RSI indicates a weakening of the trend. A close below the loser rising trendline is an indication of a trend reversal or correction
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.