European stocks vulnerable – EURO STOXX 50 and DAX forecast

Intermediate
  • The global financial markets “risk on” theme has been damaged since last Thursday’s selloffs across global stock indices.
  • Despite Friday rebounds, Monday has seen a renewal of negative forces attempting to resume the larger bear theme from September.
  • Risk off” is being driven by:
    • Fading hopes of a US economic relief package before the US elections
    • Surging COVOD-19 cases across Europe
    • More aggressive lockdown measures throughout Europe
    • Risks of no trade deal between the UK and EU
  • Here we look at the German and pan-European benchmark averages, the DAX and the EURO STOXX 50.

DAX day trade outlook: Negative bias resumes

Day trade update and view

A Friday-Monday rebound above 12850/860 and 12949/951 resistances, to then stall below 13052.5 at 13018 and then to significantly sell-off below 12800/780 supports to resume negative forces from last Thursday’s plunge through multiple supports, to keep the threat to the downside Tuesday.

Day trade setup

  • We see a downside bias for 12708.5/691; a break here aims for 12581.5 and 12521 lows, possibly towards 12400/390.
  • But above 12886 opens risk up to 13018 and 13052.5, possibly 13163.

DAX intermediate-term outlook

The late September sell-off below 12625.5 signalled an intermediate-term shift to a broader range seen as 12199.5 to 13244.5/279.

  • Downside risks: Below 12199.5 sets an intermediate-term bear trend to target 11589.5, 10856.5 and 10159/10000.
  • Upside risks: Above 13244.5/279 sets an intermediate-term bull trend to target 13461, 13824 and maybe 15000.

8 Hour DAX Chart

dax chart

EURO STOXX 50 day trade outlook: Negative theme after rebound failure

Day trade update and view

A Friday-Monday rebound attempt above Thursday resistances seen as high as 3271, but stalling and falling from 3276 on Monday through 3220/14 supports, to resume negative pressures from last Thursday’s plunge through multiple supports to 3166, to keep the risk lower for Tuesday.

Day trade setup

  • We see a downside bias for 3197/91; a break here aims for 3166 and 3136.
  • But above 3230 aims for 3256 and opens risk up to 3276 (and possibly even 3301).

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 is the Market Chartist and 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 Mar... Continued

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