Summary:
- Temporary relief on the stock markets after the turbulent end of the previous week
- The US-China trade war is again at the top of the agenda
- US500, FRA40 and DE30 rebound from key support levels
US500 remains below the trend line
Monday's session brings a recovery across the global equity market. Nevertheless, the escalation of the trade conflict between the US and China may continue to be a drag for investors. Despite the rebound, markets are not overly enthusiastic. A bounce higher was triggered by Trump's recent statements suggesting a relaunch of trade talks with China. Looking technically at the S&P500 index, one can see that the price remains below the upward sloping trendline. According to the classic technical analysis, further declines could take place. Currently, the key resistance is the zone at 2940 handle, which has stopped the upward move a few times already. The place from where the rebound started is not indifferent - the price bounced off the support at 2825 handle, where one can find lows from 15 August. In case a break lower occurs, one cannot rule out an attack on the price zone at 2750 handle. The 38.2% Fibonacci retracement of the upward impulse started in December 2018 can be found there.
Source: xStation5
FRA40 above key support
The French index also saw significant declines at the end of last week. However, the first session after the weekend brings a recovery. What one may find interesting is the fact that the price once again bounced of the key support marked by 38.2% Fibo level and 1:1 market geometry.. However, one should keep in mind that a break below the trend line occurred recently and bears may get more encouraged. The index has been struggling to break back above the trendline for some time. Having said that, another test of the 5250 pts handle cannot be ruled out and in case the price breaks below the zone marked with green colour on the chart, declines may accelerate. In such a scenario the 50% Fibo retracement could be the next support level to watch.
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Source: xStation5
Possible inverse head and shoulders pattern on DE30
Sellers have been dominating The German stock exchange for some time already. The German index dipped towards the support zone at 11.460 handle on Friday, where key low from 6 August is located. With today’s rebound it looks like the inverse head and shoulder pattern is building on the chart. However, one should keep in mind that the “buy” signal will be generated at the moment of breaking above the neckline that more or less coincides with the resistance zone at 11.840 handle. As long as the price is below this hurdle, long positions should be treated with caution. The nearest short-term resistance can be found at 11700 points.
Source: xStation5
