European stock markets are extending upward move this morning, following an upbeat session on Wall Street. While the German GDP report for Q2 2022 missed expectations and showed no growth, reports from other euro area economies surprised to the upside, providing support for upbeat market sentiment.
Taking a look at Euro Stoxx 50 index (EU50) at D1 interval, we can see that the index is trying to make a break above the downward trendline today. EU50 broke above the resistance zone marked with 50% retracement of the upward move launched after US presidential elections in November 2020. While a break above the downward trendline is certainly a positive, it may be too soon to talk about trend reversal. According to Overbalance methodology, a break above 3,908 pts would be needed for it. The 200-session moving average (purple line) can be found near the upper limit of the Overbalance structure and it is a key mid-term resistance to watch. However, before bulls reach the area, they would need to break above the resistance zone marked with 38.2% retracement in the 3,825 pts area.
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