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European Stock Markets failed to get a lift on Weak Euro

Market Analysis

UK100 & GER30, H4

European stock markets up from early lows, but GER30 and UK100 remain down -0.19% and -0.18% respectively compared to Tuesday’s close, after a cautious session in Asia, where the Nikkei closed with a loss of -0.35%. GER30 and UK100 are also slowly erasing earlier losses as insurance and tech companies recovery and U.S. futures move higher, pointing to a stronger open. The GER30 failed to get a lift from a weaker EUR and ECB officials trying to calm tightening speculation, although it is clear that the ECB is on the way to end net asset purchases this year and either at the end of September or via another reduced QE extension and that will bring rate hikes into focus in 2019. So speculation of a rate move this year may be overdone, but in the central scenario the ECB will continue to take the foot off the accelerator.

The GER30 perked up to 13,252.00 today, after yesterday’s lows at 50-Day MA at, 13,132.00. As can be observed in a shorter timeframe such as a 4-hour chart, the index is in a down trend since January 4, however it manage to hold a strong support at the 200-period MA, at 13,130.00, by making highs and lows between 13,130-13,360 area. The 200-period MA level has been retested 5-times up to now. Hence despite the weakness seen in January, the wider picture of GER30 remains bullish, considering we will not see any break below the 13,130.00.  In the uptrend, the next resistance comes at the December’s resistance at 13,350.00. This positive picture could also be justified by the crossing of 50-period MA above the 200-period MA, which suggest further upcoming positive momentum. 

Meanwhile, UK100 present weakness as well, but seen only  the last 3 days. It posted an intra-day high at 7,749.00 today, however in short-term, weakness still holds after yesterday’s drift down to 50-period MA, at 7,714.00.  The UK100 is strongly supported by 50-period MA since December 12, hence in short-term any break below this level will indicate downwards momentum. Oppositevely , any crossing back to the upper Bollinger BAnds pattern, within the day (above 7,760.00 ), could triggered a retest of recent swing highs at 7,790.00 area.

However in a Bigger picture, UK100 like GER30, remain at record highs, hence only a crossing below the 20-DAY MA at 7,670.00, would suggests that bulls have lost the control of the asset, and therefore UK100 is likely to retest the 2017’s resistance at 7,600.00.

 

Daily Momentum indicators remain positive, with RSI at 66, Stochastic moving in the overbought  territory, while MACD remains at record highs.

 

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Andria Pichidi

Market Analyst

HotForex

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