Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Technical Analyst, Saxo Bank
Summary: AEX25 breaking resistance. BEL20 range bound. Diamond bottom and reversal pattern in CAC40. SMI20 forming a rising wedge.
AEX 25 Opened Monday morning above resistance at 676 breaking bullish out of its Ascending triangle like pattern. That gives a potential target of 719. However, there are obstacles on the way where market can turn around. The falling (black) trendline offers some resistance. Resistance at 685 and 698.
If AEX closes below 654 bear trend resumes.
BEL 20 has been range bound for a few weeks now. If closing above 3,804 a move to resistance at 3,925 is likely.
Close below 3,638 bear trend resumes.
CAC40 has formed what looks like a Diamond pattern. Diamond patterns are usually Reversal patterns but can also be Continuation patterns. Here it seems to be a bottom and reversal pattern. Broken bullish out of the pattern and trying to close the gap. If closing above strong resistance at 6,188 a move to test the upper falling (black) trendline is possible.
Resistance around 6,316-6,358.
if CAC drops back and closes below the upper falling trend line in the Diamond this bottom and reversal pattern is busted. A close below 5,874 will resume down trend.
SMI 20 is trading in a rising wedge like pattern. If SMI closes above upper rising trend line and resistance at the 0.618 retracement at 11,216 a move to 11,420 is likely. Strong resistance at 11,751 If breaking out bearish and closing below 10,755 a sell off is likely to test June lows.