Euro Stoxx 50 stock index (EU50) bulls look exhausted below the descending line.
The blue-chip EU50 stock index has impressively improved since the start of the year, adding 10% to its value to reach four-month highs. The market is currently testing the previous peak of 3,263 and the downward trendline is drawn from the top of July 2018 at 3,535 but the RSI is close to its 70 overbought level suggesting that the rally is overdone.
A failure to break the downward pattern could see prices falling into the 3,214-3,192 area, encapsulated by the high on February 6th and the 20-day moving average (MA). Another decline could open the way towards the 50-day MA currently at 3,100, while lower the bears would push hard to overcome the bottom of the Ichimoku cloud seen around 3,034.
In the positive scenario, the stock could stretch above the descending line to challenge the 200-day MA at 3,300. If efforts prove successful, bullish action may continue until the 3,375 previous support level. Another winning battle could see gains rising up to 3,453.
In the three-month picture, the market is currently trading at the top of its range, where any extension higher and more importantly above the 200-day MA would put the stock back into the bullish mode.
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