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EURX50 on a Daily-Timeframe
The Euro Stoxx 50 Index on a daily timeframe reveals a mixed technical picture, showing a gradual recovery from its recent lows near 4600 but struggling to break key resistance levels. The index had been under pressure after peaking at 5141 in early June and forming a descending triangle pattern, with the 5000-level proving to be a significant psychological and technical resistance. The recent upward move stalled just under 5000, reflecting sellers’ dominance near this critical zone.
In the past week, the index showed signs of a relief rally, driven by buyers stepping in near the 4600 mark, after forming bullish divergence. However, this recovery faced resistance at the 5000 level, which coincides with the 100-day moving average (blue line) and the descending trendline from earlier highs. As of the latest session, the Euro Stoxx 50 has pulled back towards the 4822 support, hinting at a potential retest of this level.
Technical indicators present a cautious outlook. The Relative Strength Index (RSI) is hovering near 47, reflecting neutral momentum, while the stochastic oscillator has recently turned bearish, crossing down from overbought territory. This suggests that the recent rally may have been overextended, and the current pullback could continue unless a strong bullish catalyst emerges. The 200-day moving average (yellow line) near 4750 remains a key dynamic support.
Looking ahead, the main scenario sees the index holding above the 4822 support and potentially rebounding towards 5000 once again. A breakout above this level could pave the way for a test of the 5141 resistances.
However, failure to hold above 4822 may see a retest of the lower 4600 region, which has provided significant support in recent months. A decisive break below 4600 could trigger a deeper sell-off.
Traders should remain cautious heading into Friday’s U.S. Non-Farm Payrolls (NFP) report, a key event that could heavily influence market sentiment. The disappointing U.S. manufacturing data earlier this week has already raised concerns about a potential slowdown in global growth, which weighed heavily on European stocks.
The upcoming NFP release will be crucial in assessing the U.S. labor market's strength and its potential impact on Federal Reserve policy. A stronger-than-expected report could push the index lower by reinforcing the case for higher interest rates, while a weak report may offer some relief to stocks by suggesting a pause in the tightening cycle.
Summary:
- The Euro Stoxx 50 Index is struggling with resistance near 5000.
- Recent recovery from 4600 shows bullish divergence but faces challenges.
- Technical indicators reflect neutral to bearish momentum with caution advised.
- Key support at 4822 is crucial for future market direction.
- Upcoming U.S. Non-Farm Payrolls could significantly impact market sentiment.
