EuroStoxx50: Potential for new highs on the horizon

ACTIVTRADES:EURO50   EuroStoxx 50 Cash Index
It is essential to understand the dynamics and correlation between the main European indices and the EuroStoxx 50. The EuroStoxx 50 is mainly influenced by the German DAX and the French CAC40, showing a strong long-term correlation between these indices. Although this high relationship is evident in the three major indices, it is not observed to the same extent in other European indices as they do not have as much representative exposure.

Today, we are watching for several events that could impact the markets, such as the ZEW (Center for European Economic Research) Index release and bond issues in Spain, Italy, the UK and Germany. In addition, we await the statement from Anneli Tuominen of the ECB supervisory team on the new financial paradigm in the European market. Although we do not anticipate a significant change in the current direction of the EuroStoxx due to these events.

Looking at the charts, we observe an uptrend in the index during February after breaking a sideways consolidation from December 14 to January 26 broken with the strong trend at the beginning of the year. Subsequently, it has moved during the whole month of February in an uptrend, touching today the lower part of the channel.

However, the RSI divergence indicates that the index is oversold at 36.04%, suggesting the possibility of a change in direction to the upside. We are alert to possible clear signals of a change in the direction of the index, with possible targets at 4594 points (with the possibility of a strong correction to 4459 points) or to the upside targeting 4821.42 points. It is essential to be prepared to adapt our strategies as market conditions evolve, as a price zone seems to be building by the strong hands of the market and the crosses of averages do not seem to be showing signs of change but of continuation.

Ion Jauregui - AT Analyst

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