We mentioned in our previous analysis that we should prefer short positions as the index was rejected once again at 81.50 and we should see a pullback towards 80.70-85. The index moved lower towards 80.95 and it is holding firm above the short-term upward sloping trend line support as shown in the chart below.
If the index holds this trend line, then we should see another move towards the highs to test the important resistance of 81.50. If the trend line breaks, we should expect the index to fall towards 80.50-60. Short-term support is at 81 and short-term resistance is found at 81.25-40.
On the daily chart, the index is trading close the resistance area as it did for four days during the last time it got rejected at 81.50. With the ECB announcing a possible rate cut and the US macroeconomic news on Friday, we expect the index to start a new trend soon. We prefer neutral or short positions as long as the index trades below 81.50.
