Technical Analyst, Saxo Bank Group
Summary: AEX25 formed top and reversal pattern but not yet confirmed reversal
BEL20 still rangebound needs to break out
CAC40 uptrend remains but is weakening
BEL20 is testing the upper falling trendline in the Symmetrical triangle like pattern the Index is forming. As long as BEL20 does not take out the4 peak at 3,963 the Bearish Engulfing top and reversal pattern is valid.
However, BEL 20 needs to close below key support at 3,819 for a confirmed downtrend that could take the Index down to strong support at round 3,700.
If BEL 20 breaks above 3,963 there is room up strong resistnace at around 4,031. Interestingly RSI is still showing positive sentiment and no divergence indicating we could see a move higher.
CAC40 uptrend remains strong testing all-time highs. However, RSI is showing divergence indicating uptrend is weakening but for CAC40 to reverse the uptrend a close below 7,074 is needed. But look out for a potential top and reversal pattern to be drawn which could signal the a reversal.
A close above all-time highs will pave the way for a potential move to around 7,590
RSI divergence explained: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
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