Shares slid lower in Europe on Monday following a mixed trading session in Asia overnight after new virus cases were spotted in Australia, the US and Germany during the weekend. Market sentiment remains uncertain towards risk assets as coronavirus fears continue to grow while volumes keep on decreasing as more and more traders tend to get away from their desk during the summer season. In addition to fears of a second wave of the virus, market sentiment is also being weighed down by resurging tensions over Hong Kong after mainland China proposed a new law allowing its government to prosecute residents in the Special Administrative Region. It is still difficult to say whether the current consolidation will open the doors to a deeper market correction or whether it is just a pause before prices reach new highs. Technically speaking, bullish trends on most benchmarks remain valid so far and prices will continue to trade higher as long as no major support gets broken.
The Stoxx-50 Index still trades inside the lower part of its mid-term bullish channel with a support level at 3,195pts. Despite a recent failure below 3,285pts, the rising 34-day moving average combined with the lack of a bearish break-out on the RSI indicator increase the likelihood of the bullish trend continuing in the very short-term.
Pierre Veyret– Technical analyst, ActivTrades
Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.
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