The EU 50 stock index remains stuck in bearish territory as the recent upswing failed to lift the price above its moving averages. The index has now turned lower again after the rebound was halted at the 50% Fibonacci retracement of the downleg from 3688.70 to 3258.70, and is heading towards February’s one-year lows.
Momentum indicators point to further weakness in the short term, with both the RSI and the stochastics moving closer to oversold territory. However, there are signs that the downside momentum may be easing as the RSI appears to be flatlining and the %K line of the stochastic oscillator is attempting to reverse upwards.
Further losses could see the index revisiting the one-year low of 3258.70. A breach of this level could see the 3210 level (a support barrier from February 2017) coming into focus and would also underscore the increasingly bearish outlook in the medium term.
However, if today’s upside moves pick up further momentum, the index could meet resistance at the 23.6% Fibonacci retracement at 3360. A break above that level could see further resistance at the 38.2% Fibonacci level at 3423 before having another go at the critical 50% Fibonacci level around 3475.
