EUROSTOXX broke the DownTrend Line.
The EURO STOXX 50, which serves as a benchmark for major eurozone companies, has been trading sideways in recent months, fluctuating between a strong support level at 4,730 and resistance at 5,099. After multiple tests of the support, the price has formed candles with long lower shadows, indicating a rejection of lower prices and buyer interest in maintaining levels above this critical point.
Recently, the index provided a significant technical signal by breaking the Downtrend Line that had been in place since previous peaks. This breakout is a strong indicator of potential short-term growth.
Main Scenario: Bullish
With the Downtrend line broken, the price now has the potential to target higher levels on the daily chart. The 5,000.00 area is the first key resistance to watch, followed by the previous peak at 5,099, which would confirm a stronger bullish trend.
Potential Bullish Movement:
Important Indicators: Monitoring volume during the rally is crucial; low volume could indicate weakness in the breakout.
Alternative Bearish Scenario
Despite the bullish technical scenario, the market may reverse if the support region at 4,727.48 is broken. A consistent daily close below this level, accompanied by significant volume, would invalidate the bullish structure and could attract strong selling pressure.
In this case, a possible Sell Opportunity could appear if a daily candle closes below the 4,727.00 level. Possible targets would be:
A Stop Loss could be put around 4,770.00, about 4300 points.
Warning Signs: Heightened global risk aversion, a declining macroeconomic situation in Europe, and ongoing weakness in industrial and consumer sectors could intensify selling pressure.
Macroeconomic Context
Europe faces a tough landscape. Germany, the region's primary economic driver, is grappling with an industrial slowdown and reduced consumption, impacting the competitiveness of its companies. These issues have lowered growth projections for the eurozone.
Additionally, escalating tensions with Russia present a significant geopolitical risk. As the European Central Bank seeks to balance inflation control with growth stimulation, uncertainty in both geopolitical and economic spheres continues to affect the markets.
The upcoming interest rate decision on December 12 may provide clearer guidance on the European Central Bank's future actions.
Disclaimer
74% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and if you can afford the high risk of losing your money. Past performance is not indicative of future results. Investment values may fluctuate, and you may not recover your initial investment. This content is not intended for residents of the UK.
Recently, the index provided a significant technical signal by breaking the Downtrend Line that had been in place since previous peaks. This breakout is a strong indicator of potential short-term growth.
Main Scenario: Bullish
With the Downtrend line broken, the price now has the potential to target higher levels on the daily chart. The 5,000.00 area is the first key resistance to watch, followed by the previous peak at 5,099, which would confirm a stronger bullish trend.
Potential Bullish Movement:
- Ideal Entry: A pullback to around 4,830.00 (near the broken downtrend line), followed by a bullish candle in that area, could signal a buying opportunity.
- Primary Target: 5,015.00.
- Secondary Target: 5,099.17.
- Stop Loss: Below 4,740, with a more conservative option at 4,727.00 (indicating loss of support).
Important Indicators: Monitoring volume during the rally is crucial; low volume could indicate weakness in the breakout.
Alternative Bearish Scenario
Despite the bullish technical scenario, the market may reverse if the support region at 4,727.48 is broken. A consistent daily close below this level, accompanied by significant volume, would invalidate the bullish structure and could attract strong selling pressure.
In this case, a possible Sell Opportunity could appear if a daily candle closes below the 4,727.00 level. Possible targets would be:
- 4,500.00: Intermediate psychological and technical support. About 22700 points.
- 4,400.00: Next relevant support, observed in previous months. About 33700 points.
A Stop Loss could be put around 4,770.00, about 4300 points.
Warning Signs: Heightened global risk aversion, a declining macroeconomic situation in Europe, and ongoing weakness in industrial and consumer sectors could intensify selling pressure.
Macroeconomic Context
Europe faces a tough landscape. Germany, the region's primary economic driver, is grappling with an industrial slowdown and reduced consumption, impacting the competitiveness of its companies. These issues have lowered growth projections for the eurozone.
Additionally, escalating tensions with Russia present a significant geopolitical risk. As the European Central Bank seeks to balance inflation control with growth stimulation, uncertainty in both geopolitical and economic spheres continues to affect the markets.
The upcoming interest rate decision on December 12 may provide clearer guidance on the European Central Bank's future actions.
Disclaimer
74% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and if you can afford the high risk of losing your money. Past performance is not indicative of future results. Investment values may fluctuate, and you may not recover your initial investment. This content is not intended for residents of the UK.
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