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Technical Update - EuroStoxx50/EU50 and DAX/GER40 uptrends very stretched. When will a correction hit? Technical Update - EuroStoxx50/EU50 and DAX/GER40 uptrends very stretched. When will a correction hit? Technical Update - EuroStoxx50/EU50 and DAX/GER40 uptrends very stretched. When will a correction hit?

Technical Update - EuroStoxx50/EU50 and DAX/GER40 uptrends very stretched. When will a correction hit?

Equities 2 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

EuroStoxx50/ EU50 cfd is trading higher this morning to new all-time high.
RSI is also moving higher and is currently above 80 i.e., in overbought territory, a very stretched uptrend.
However, there is no divergence on RSI indicating higher Index levels and there is no strong resistance levels ahead.

The trend is your friend and until it is about to end one should not fight it. And the 1.382 projection of the July to October downtrend is indicating Stoxx50 could reach 4,681 around New Year.
  
However, a break below the lower rising trend line and a daily close below 4,523 is a strong indication of a correction is unfolding.  
If that scenario plays out a correction could take the Index down to around 4,400
Source all charts and data: Saxo Group
EU50 cfd: A break below lower rising trendline adn below 4,517 could be first indications of an unfolding correction. Support at around 4,491 and 4,405

DAX gapped higher right at the opening to spike above 17K but is, at the time of writing, fading. If that scenario is continuing until the end to the trading day the Index could be forming a top and reversal pattern.
If DAX is closing the opening gap and especially if closing below 16,760 a correction is likely to be unfolding.

RSI is at an extreme level not seen in decades (if ever). Being in overbought territory a correction is getting closer and closer.

If DAX is closing below 15,760 there is some support at around 16,528 but a larger correction lower could be in the cards
GER40 cfd. If closing below 16,810 a top and reversal pattern has been formed. A bearish beak of lower rising trendline will strongly suggest a correction is unfolding with some support at around 16,530

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