The EU 50 index has completed the seventh bullish week in a row following the bounce off the 3260 support barrier. However, in the short-term, the index has erased some of its gains over the last hours during Friday’s session after it reached a new 14-week high of 3580.70.
Looking at momentum oscillators on the daily chart, they suggest further declines may be on the cards in the short-term. The RSI is below its 70 line, with negative momentum and is pointing downwards. The stochastic oscillator posted a bearish cross within the %K and D lines, suggesting further losses.
In case of further declines, immediate support may be found near the 200-day simple moving average and the mid-level of the Bollinger Band around 3515. A downside break of that zone would open the way for the 3480 support level, taken from the peak on February 26. If sellers manage to push below that hurdle too, that would mark a lower low on the daily chart and challenge the 50-day SMA, which coincides with the lower Bollinger band of 3435.
On the flip side, if the bulls retake control, the price advance may stop near the 3688.80 resistance level, taken from the high of January 23. A potential upside violation of this level would take the index higher until the 3708 barrier.
Overall, the index is expected to create a bearish correction of the big upward movement, before it continues the bullish tendency.
