Stocks slid lower on Friday in Europe, extending yesterday’s losses and following the bearish trend overnight in Asia, as risk appetite fades across the globe. Despite a positive start to the week, record increases in the number of infections and deaths in several countries (California, Florida, Mexico, BRIC countries etc…) has brought some uncertainty back to the markets and impacted market sentiment. Even if most investors, reassured by unprecedented monetary and fiscal stimulus, still believe in the soundness of economies, they are also digesting the fact the virus isn’t disappearing. This situation leads them to temper their investments and brace for potential new local lockdown measures this year, which would make the current recovery slower than initially estimated. Bullish trends remain valid so far on most benchmarks but this situation increases the likelihood of slightly less directional markets in the coming weeks as traders may wait for significant progress on the virus front to increase their exposure to riskier assets.
The Stoxx-50 Index is trading towards its first available support level, over 3,250pts, in a corrective move inside its bullish channel. The market continues to register fresh highs while the lows are above its short-term bullish trendline, which is keeping the 21-day moving average bullish and acting as a dynamic support for the price. The upward target remains just below 3,400pts but a break-out below the 3,250pts zone could see the price fall back to 3,175pts on a short-term basis.
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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