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Technical Update - EuroStoxx50/EU50 and DAX/GER40 uptrends very stretched. When will a correction hit?
Kim Cramer Larsson
Technical Analyst, Saxo Bank
- EuroStoxx50 testing gap just above key support at 4,976
- DAX has upside potential to 18,427, yet a break below 17,900 could reverse the picture
The EuroStoxx50/EU50 CFD gapped higher last week. A small gap but a gap nevertheless
This gap is currently being tested but remains unfilled. Closing below 5,007 would seal this gap. If the gap is closed, the next level of support to watch is at 4,976, with a breach here potentially leading to a sell-off towards the 4,886 support level.The EuroStoxx50/EU50 CFD is maintaining an uptrend within a rising channel pattern, though signs of fragility and exhaustion are evident. The index's ability to sustain this trend hinges on not closing below a key support level at 4,976 short-term
The DAX index is currently exhibiting a rising channel-like pattern, suggesting a continued uptrend with a potential target at 18,427, which corresponds to the 200% (2.00) projection of the correction observed in the third and fourth quarters of 2023 - see weekly chart
However, if the DAX breaks out bearish from this channel and closes below 17,900 on a daily basis, it could initiate a downward movement towards a strong support level at around 17,620.
While the RSI (Relative Strength Index) is showing divergence, suggesting that the trend might be running out of steam, a definitive top and reversal pattern has not yet formed. This divergence warrants attention as it could precede a trend reversal or consolidation, but without a clear reversal pattern, the immediate trend direction remains upward
However, if the DAX breaks out bearish from this channel and closes below 17,900 on a daily basis, it could initiate a downward movement towards a strong support level at around 17,620.
While the RSI (Relative Strength Index) is showing divergence, suggesting that the trend might be running out of steam, a definitive top and reversal pattern has not yet formed. This divergence warrants attention as it could precede a trend reversal or consolidation, but without a clear reversal pattern, the immediate trend direction remains upward
GER40 cfd. A break below 17,862 next support at around 17,612 and 17,155-17,000
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