Technical Analysis: STOXX Europe 600: anticipated correction

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The STOXX Europe 600 Index includes a total of 600 stocks, large, medium and small caps of a set of 18 countries in the European region.....

Day By Day – Indipendent Research

After a long period of volatility between September and December, the index managed to adopt a more controlled rhythmic rise. Prices are now approaching the major resistance at 262.40 points, tested several times as a support between 2010 and 2011, correspondingto the 62% Fibonacci retracement ratio of the bearish movement. This solid obstacle should contain the progression in the index for the coming weeks.

We are therefore neutral in the medium-term.



Anticipation  :
In the shorter-term, in addition to the proximity of a strong resistance zone, also corresponding to the target calculated by the first bullish rally conducted between September and October 2011, the current trend appears to be very over-extendedand begins to show signs of weakness.
The RSI indicator shows an important overbought level in prices, but also leaves us with a bearish divergence indicating that the movement is losing its power. These technical elements argue for a bearish correction towards the last point of rebound.
We are therefore short-term negative and envision a return towards the support zone between 246.10 and 242.10 points.
We set the invalidation threshold for this negative scenario slightly above the major resistance at 262.40 points.

Close price 254.11

2 months Opinion NEUTRAL
2 weeks Opinion NEGATIVE

Resistances 262,4 / 267,5 pts
Supports 246,1 / 242,4 pts

Follow-up Analysys: The tracker dated 16/01/2012 recommended the purchase of the Markit iBoxx $ Treasuries 3-7Y. Since then, little progress has been marked in prices, but a new ascending low has been marked, indicating that the bullish dynamics continue.


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Source: ETFWorld – Day By Day – Indipendent Research



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