EuroStoxx50: Stabilization before the speech of the head of the ECB

EuroStoxx50: Stabilization before the speech of the head of the ECB

25 August 2017, 12:30

Market participants took a wait-and-see approach on the eve of the Fed Chairman's statement (14:00 GMT) and the ECB head (19:00 GMT).

As follows from the minutes of the ECB meeting of July 20 published last week, the ECB's Governing Council is alarmed by the current strength of the euro. It is likely that the ECB will not rush to tighten the policy. Mario Draghi will try not to disturb the markets and is likely to favor the extension of the QE program and will be concerned about the high cost of the euro. In this case, the European indices will receive support and an incentive to resume growth.

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Levels of support and resistance

Since May, when the EuroStoxx50 index reached its annual maximum near the 3680.0 mark, a downward correction began. The EuroStoxx50 index fell to support level 3440.0 (EMA144 on the daily chart and Fibonacci level of 23.6% of the downward correction to the wave of growth since July 2016 and from the level of 2675.0).

In case of breakdown of the level 3440.0, the EuroSTOXX50 index will go to the key support level of 3400.0 (EMA200 on the daily chart). Breakdown of this level increases the risks of further decline and breakdown of the bullish trend.

The reduction targets then can be support levels 3295.0 (Fibonacci level 38.2%), 3265.0 (EMA200, EMA144 on the weekly chart).

The negative dynamics prevails. The European stock indexes are significantly influenced by the expectation of an early curtailment of the QE program in the Eurozone, which ends in December. Preferred short positions, until the situation on this issue is clarified, and the QE program will not be extended.

Support levels: 3440.0, 3400.0, 3325.0, 3295.0, 3265.0

Resistance levels: 3482.0, 3500.0, 3590.0, 3610.0, 3680.0, 3700.0


Trading Scenarios

Sell ​​Stop 3430.0. Stop-Loss 3480.0. Take-Profit 3390.0, 3325.0, 3295.0, 3265.0

Buy Stop 3480.0. Stop-Loss 3430.0. Take-Profit 3550.0, 3590.0, 3610.0, 3680.0, 3700.0

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