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 and CAC40 pushing to extend uptrends but will they succeed?.
BEL20 range bound
CAC 40 is trying to extend its uptrend testing previous peak. However, if CAC 40 ends the day with a bearish candle it could be the peak. At least short term. 7,187 could be key support for a correction below the medium-term rising trend line and down to support at around 6,946.
A close above 7,390 will confirm the uptrend will be extended despite RSI divergence. A move to 7,550-7,600 would be likely.
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