The Euro Stoxx 50 index in its 2-hour chart reveals exhaustion signals from the current bullish trend. In this post, we will expose our arguments to expect a bearish positioning.
1. Both the RSI as the MACD indicator shows bearish divergences. This exhaustion signal does not mean that the price will reverse immediately; it is only a signal that the market could make a pause of the main trend. In this case, Euro Stoxx could make a momentary halt on its uptrend.
2. The Fear & Greed Index reveals an extreme greed sentiment. Similarly to bearish divergences, the market sentiment is not indicative of an immediate reversion.
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3. A bearish position will activate if Euro Stoxx drops and closes under 3,685 pts. Our conservative perspective, the potential profit target is at 3,635.9 pts. If the pan- European index extends its falls, the index could drop to 3,595.8 pts, until 3,546.7 pts.
4. The sell-side scenario will be invalidated if the price soars above 3,720 pts, or if the Euro Stoxx 50 pierces but don't close below 3,685 pts.
Trading Plan Summary
Entry Level: 3,685 pts.
Protective Stop: 3,720 pts.
1st Profit Target: 3,635.9 pts.
2nd Profit Target: 3,595.8 pts.
3rd Profit Target: 3,546.7 pts.
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