EUROSTOXX 50: No Christmas presents under the Euro tower tree?

EUROSTOXX 50: No Christmas presents under the Euro tower tree?

20 December 2017

This year the Christmas rally is struggling to take off. Will the end of the year be without verve for the main European markets?

Will the end of the year be without verve for the main European markets? The expected Christmas rally, which statistically occurs in the second half of December, is struggling this year to take off. Indeed, in the sessions of last week, the main European markets have remained within a lateral phase that now lasts from few months. Others have generated significant warning signs on the charts, approaching technical levels of primary importance. Last week, despite the great dynamic on of the main global central banks, there were no major ideas on the price lists, since there were no significant changes compared to the market. As expected, the FED raised interest rates, while in the Eurozone Mario Draghi confirmed that the ECB is ready to increase the Quantitative Easing program in terms of amount or duration if the economic outlook worsens. The number one of the Euro tower also confirmed that rates will remain low beyond the end of Quantitative Easing. The only novelty is the estimate of inflation for 2020, expected with 1.7 percent. This forecast still expresses a level well below the 2 percent target, but could still lead to strong movements in the government sector. The next market driver on which investors are concentrated this week are the passage to the congress of the final text of the US tax reform.

The future performance will depend on various corporate-, industry- and economic factors. Investors should consider the risks before taking any investment decisions. The performance of the underlying might differ from investors’ expectations and lead to a potential capital loss.


Technical analysis

During the week of central banks, the EUROSTOXX 50 continued the sideline phase that began in mid-November. The prices, after reaching the high in the beginning of the year of 3,708 points, started a fast correction reaching a low of 3.520 points on November 15th. This movement allowed to draw a hammer, a graphic pattern of inversion, then confirmed in the following session, from which the lateral market phase began. Several times the prices, between November and December, have tried to break the solid barrier at 3,600 points, always with a negative result. The last attempt in this sense, dating back to December 12, the index has crossed the medium-term bearish trend line described by the highs of November 1 and November 7. Hence the market recorded a significant increase in volumes. From now until the end of the year, the levels to be monitored are the resistance at 3,600 points, whose break could reignite the enthusiasm of the buyers, with first resistances at 3.625 and 3.700 points. On the downside, the break of 3,520 points could open the way to 3,500 points and then 3,480 points.

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07/12/2022 10:00:33


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