Euro Stoxx 50, in its 2-hour chart, presents an ending diagonal formation that looks to be finished, after the breakdown developed in the past week.
The aggressive decline developed in the past week broke and closed below the previous relevant low at 3,700 pts. This movement gives us some clues that more weakness could develop for the coming sessions in the European stock market.
The current pause seen in the Pan-European index, suggests that the price could make a marginal bounce. This movement could provide the addition of new short positions anticipating the development of a new bearish leg.
A short position will activate if the price rises and, then, the price action closes below 3,730 pts. From a conservative perspective, the second bearish leg could drive the price down to a potential first target of 3,624.6 pts.
The extension of the bearish movement could drag to the Pan-European index until 3,537.9 pts, and even, to 3,433.2 pts as a final bearish target.
The level that invalidates our bearish scenario is settled at 3,801 pts.
Trading Plan Summary
Entry Level: 3,730 pts.
Protective Stop: 3,801 pts.
1st Profit Target: 3,624.6 pts.
2nd Profit Target: 3,537.9 pts.
3rd Profit Target: 3,433.2 pts
Risk Warning: CFD and Spot Forex trading both come with a high degree of risk. You must be prepared to sustain a total loss of any funds deposited with us, as well as any additional losses, charges, or other costs we incur in recovering any payment from you. Given the possibility of losing more than your entire investment, speculation in certain investments should only be conducted with risk capital funds that if lost will not significantly affect your personal or institution’s financial well-being. Before deciding to trade the products offered by us, you should carefully consider your objectives, financial situation, needs and level of experience. You should also be aware of all the risks associated with trading on margin.
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