The Euro Stoxx 50 (ESTX50) index scales 0.30% to 3514 pts on Wednesday session. European stocks advanced after China announced the reduction of tariffs imposed on some products from the United States.
China announced the tariff exemption for 16 types of products that include some anti-cancer drugs, lubricants, animal feed ingredients wheat, and fish meal.
From Beijing, they said that these exemptions are aimed to reduce concerns about the rising costs that are dragging the trade conflict and the deceleration that the Chinese economy is experiencing. The reduction of tariffs will be effective as of September 17.
Technical overview
The Euro Stoxx 50 index in its 4-hour chart shows an internal structure developed in five waves. The internal formation moves inside a potential zig-zag pattern (5-3- 5 sequence) from the August 15 low. Currently, ESTX50 is near to the exhaustion zone between 3,524 and 3,540 pts.
The pierce below the invalidation level at 3,473 pts, could drive the price action to test its support of 3,407 pts. If the European index finds buyers on this zone, it is possible the formation of a wave (4) and a new upside in five waves.
The alternative scenario occurs if the price extends its drops and plunges below the 3,407 pts. In this case, we expect more declines to 3,250 pts.
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