City Index | Aug 27, 2019 16:24
Europe’s benchmark index will almost certainly keep swinging sharply for the foreseeable future, as signs of resilience are repeatedly undermined by interminable trade brickbats.
In other words, hope may spring eternal, but in the meantime, there is little chance that a recent sell-the-rip bias will switch back to a buy-the-dip one soon.
At least not before
In lieu of one of those possibilities becoming manifest, shares in Europe and indeed globally, will remain on the roller-coaster seen over the last few months.
Chart thoughts
Despite the year’s acceleration of market-implied volatility, EURO STOXX 50 gyrations have remained well above of its pivotal 2875-3100 range. This is important for forward-looking sentiment: the band has been a ‘literal’ pivot for prices since the market’s recovery from the Global Financial crises of 2009 to 2012. As well, the lower bound of the region was the floor of last year’s winter correction. Just as positive, Europe’s rise from sovereign debt crisis doldrums continues, if we judge it by an unbroken rising trendline between late-2011 and late last year.
Yet key negative points include an unmistakeable down line tagged by monthly highs traceable all the way back to 2002. It was validated again in July.
EU STOCKS 50 CFD – monthly
Source: City Index
From a more here-and-now view, EU shares could also use some quick wins. The year’s main technical hope—the December/August uptrend has been toast since the beginning of the month. True, support has developed along aggressive daily tops and strongly defended lows between 3216-3225 over February, June and early this month. However, we should expect sellers to sense fresh blood if resistance implied by the loss of momentum below December/August’s trend repels buyers for a second time in coming days. At that point, attention will switch back to apparently solid 3216-3235 support with a vengeance.
EU STOCKS 50 CFD – daily
Source: City Index
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