European stocks plunge (DAX and EURO STOXX 50 forecast)

Intermediate
  • An even more aggressive “risk off” over the past 24-36 hours, reinforcing the negative, “risk off” signals from mid-October.
  • This is being driven by
    • Surging COVID-19 cases across Europe and more aggressive lockdowns measures across the continent
    • More aggressively rising cases of the coronavirus in the US
    • Diminishing chances of a US pandemic economic relief package before the US elections next Tuesday 3rd November
  • This has seen global equity markets sell-off, with the European stock averages getting hit hard.
  • Below we analyse the German and cross-European benchmark averages, the DAX and the EURO STOXX 50.

DAX day trade outlook: Plunge for a shift to an intermediate-term bear trend

Day trade update and view

An extremely aggressive plunge lower on Monday down through key supports at 12316 and critically 12199.5, shifting the intermediate term outlook to bearish with a large Head & Shoulders pattern, reinforcing the whole sell-off from mid-October, to keep the threat to the downside Tuesday.

Day trade setup

  • We see a downside bias for 12156.5 and 12077.5/064.5; a break here aims for 12000, possibly towards 11925 and even 11759.5.
  • But above 12320.5 opens risk up to 12448.5 and 12592.5, maybe even 12708.5.

DAX intermediate-term outlook

The late October sell-off below 12199.5 signalled an intermediate-term shift to a bear trend.

  • Downside risks: We see an intermediate-term bear trend to target 11589.5, 10856.5 and 10159/10000.
  • What Changes this? Above 13018 shifts the intermediate-term bear trend to neutral; through 13163 to an intermediate-term bull trend.
8 Hour DAX Chart
8 Hour DAX Chart

EURO STOXX 50 day trade outlook: Bigger downside threat increasing

Day trade update and view

An extremely aggressive self on Monday down through the recently set low at 3125 and also the key September swing low at 3086 to 3074, to completely reject Friday’s rebound just above our 3201/03 resistances to 3211, resuming negative forces from last week’s midweek plunge to 3125, plus from the whole breakdown from mid-October, to keep the risk lower for Tuesday.

Day trade setup

  • We see a downside bias for 3074; a break here aims for 3046 and 3024, maybe 3000/2990.
  • But above 3132 aims for 3154 and opens risk up to 3184, maybe 3211.

EURO STOXX 50 intermediate-term outlook

The push below 3139 signalled an intermediate-term shift to a bear trend.

  • Downside risks: We see an intermediate-term bear trend to aim for 3046, 2844 and 2690.
  • What changes this? Above 3349 shifts the intermediate-term bear trend to neutral; through 3395 to an intermediate-term bull trend.
8 Hour EURO STOXX 50 Chart
8 Hour EURO STOXX 50 Chart

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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