Blue lines- Fibonacci retracement levels
Eurostoxx50 closed at a new weekly low relative to the past 19 weeks. Price formed a fake break out at the end of July. At the time we warned traders that the new higher high in price was followed by a bearish divergence in the RSI suggesting that the up trend was weak. Soon after ta reversal has followed pushing price over the next two weeks to new weekly lows. The entire upward move from September 2022 is most probably over. We should at least expect a corrective pull back now. With price currently around 4,222, we expect the index to continue lower towards our first target at the 38% Fibonacci retracement around 4,020-4,040. Short-term trend is bearish, but there are hopes for a bullish start of the coming week on Monday August 21st, as the daily candlestick of Friday August 19th, had a long shadow below the body of the candlestick. This hammer pattern usually suggests reversal. In this case price could start a short-term bounce. Overall we expect price to continue lower over the coming months at least towards 4,020.
