Eurostoxx 50 : Bearish dynamic & resistance areas, better short
Updated
The EU stocks index Eurostoxx 50 (MOY0) has made a nice rise since the Brexit (end June), but the buyers are currently facing some difficulties to go higher. In fact, the european stock market is inside a bearish dynamic since early 2015, as characterized by the downside trendline resistance (blue) and the bearish 200 days moving average.
In this case, the sellers are likely to become majoritary again due the the following reasons :
- Proximity with the downside trendline resistance
- Beginning of a retreat at 3100 points, first resistance
- This resistance area matches with the 50% retracement of the violent drop we have seen in december - february.
Both the long term dynamics and levels should prevent the buyers to go further and initiate a pull back to where markets were in september.
Here is the precise strategy :
- Open short at the current price (3080 points on Friday close)
- Stop @ 3120 pts (above the resistance for market noise)
- First target @ 3025 points (close 50% of the position, reward/risk = 1.38)
- Second target @ 2940 points (close the other 50% of the position, reward/risk = 3.5)
In this case, the sellers are likely to become majoritary again due the the following reasons :
- Proximity with the downside trendline resistance
- Beginning of a retreat at 3100 points, first resistance
- This resistance area matches with the 50% retracement of the violent drop we have seen in december - february.
Both the long term dynamics and levels should prevent the buyers to go further and initiate a pull back to where markets were in september.
Here is the precise strategy :
- Open short at the current price (3080 points on Friday close)
- Stop @ 3120 pts (above the resistance for market noise)
- First target @ 3025 points (close 50% of the position, reward/risk = 1.38)
- Second target @ 2940 points (close the other 50% of the position, reward/risk = 3.5)
Note
First target (3025 points) hit at the opening. Half of the position closed. Waiting for the fall to continue toward the second target.For those who want to lower their risk for the 50% position left, you can put the stop @ 3015 points (above the gap that just opened).
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