2016-09-14 12:52:12

Review and dynamics
Approaching meeting of the US Fed causes tension and increased volatility in the currency market. Recent conflicting statements by the Fed officials about the interest rate hike in September create turbulence in the financial markets. Starting from yesterday, a “quiet mode” comes into force, which means that prior to the meeting on 20-21 September, it is banned to comment and make statements regarding the monetary policy.

Meanwhile, investors are preparing for the raise in the interest rate in the USA, which will trigger sales in the stock market and the rise in the USD. The head of the Federal Reserve Janet Yellen said at the end of August at the Economic Forum, that, it is believed that in the long- term when the increase in the interest rates by the Central Bank indicates good performance of the country’s economy and the companies.

At the same time, the facts that the ECB left QE program unchanged and neutral speech by ECB President Mario Draghi last week, have caused the sale of the European assets. European stock index EuroStoxx50 sharp fell yesterday and continue to decline today at the beginning of European trading session. EuroStoxx50 has broken important support levels of 3010.0 (Fibonacci 38.2% to the decline since December 2015 and EMA144 on the daily chart) and 2995.0 (EMA200 on 4-hour chart) and is now at the lower line of the ascending channel on the daily chart.

On the daily and 4-hour charts the indicators OsMA and Stochastic give sell signals; on the weekly chart the indicators are also reversing towards the short positions

Our opinion
Inaction of the ECB, which keeps monetary policy unchanged, adds pressure on the European stock market. Index EuroStoxx50 fell below the critical levels of 3040.0, 3010.0. Technical situation and the fundamental data are in favor of the "bears".

Breakout of the current support level of 2978.0 (lower line of the ascending channel on the daily chart) will cause further decline in EuroStoxx50. Breakdown of the nearest support level of 2950.0 will trigger further decline in the index EuroStoxx50 to support level of 2890.0 (Fibonacci 23.6% and the lows of August); the decline can reach the lows of this year at the level of 2700.0.

In case of breakout of the strong resistance level of 3010.0 and 3040.0 the index EuroStoxx50can rise significantly. The rise above 3200.0 (Fibonacci 61.8% and ЕМА200 on the weekly chart) can trigger uptrend.

Support levels: 2978.0, 2950.0, 2890.0, 2845.0 and 2700.0.
Resistance levels: 2995.0, 3010.0, 3040.0, 3110.0 and 3150.0.

Trading tips

Sell on the market. Stop-Loss: 3015.0. Take-Profit: 2950.0, 2890.0, 2845.0 and 2700.0.
Buy Stop: 3015.0. Stop-Loss: 2990.0. Take-Profit: 3040.0, 3110.0, 3150.0 and 3200.0.

At the lower ling of the channel
At the lower ling of the channel

Breakout of the level of 2995.0
Breakout of the level of 2995.0