2016-10-20 12:17:24

Review and dynamics
At the beginning of this week the index EuroStoxx50 had broken out the key resistance level of 3030.0 (ЕМА200 on the daily chart) and went up in the short-term ascending channel on 4-hour chart with the upper limit at the level of 3080.0.

At the same time, on the weekly chart the index is in the descending channel; therefore current rise may not exceed the level of 3080.0 (upper limit of the descending channel on the weekly chart).

From a technical point of view, further rise in the index can be prevented by the resistance level of 3051.0, which crosses ЕМА50 on the weekly chart.

Remember that volatility today will be high due the interest rate decision by the ECB and a speech by ECB's President, Mario Draghi (in the time period after 14:45 and 15:30 GMT+3).

Our opinion
If Mario Draghi announces the expansion of the incentive programs in Eurozone, the index EuroStoxx50 will rise sharply. In this the nearest target will be at the level 3110.0 (Fibonacci 50.0% after the decrease since December 2015). The upper limit of the rising channel on the daily chart is above this level.

If Mario Draghi confirms recent information about the termination of the QE, European indices, including the index EuroStoxx50 will fall sharply.

Breakdown of support levels 3030.0 and 3010.0 (Fibonacci 38.2%) may trigger further decline in the index to the nearest targets at the levels of 2935.0 (the lower line of the ascending channel on the daily chart) and 2890.0 (Fibonacci 23.6%).

Although the indicators OsMA and Stochastic on 4-hourly, daily, weekly and monthly charts show that the rise will continue, rate decision by the ECB and a speech by Mario Draghi can change the situation.

Today, traders shall be very careful when trading in the financial markets. It can be wiser to refrain from placing positions in the market.

Support levels: 3030.0, 3010.0, 2978.0, 2935.0, 2890.0, 2845.0 and 2700.0.
Resistance levels: 3080.0, 3110.0 and 3150.0.

Trading tips
Sell Stop: 3045.0. Stop-Loss: 3065.0. Take-Profit: 3030.0, 3010.0, 2978.0, 2935.0 and 2890.0.
Buy Stop: 3065.0. Stop-Loss: 3045.0. Take-Profit: 3080.0, 3110.0 and 3150.0.

In the descending channel
In the descending channel

Breakdown of the level of 3030.0
Breakdown of the level of 3030.0