Bearish case for EuroStoxx50: Correction to 2392, 2327 or 2261

The uptrend in Eurostoxx 50 that has been in place since early summer is possibly coming to an end, and the next move will probably be down. I will be looking for the market to correct towards fibos 38.2 % (2392), the 50 % (2327) or the 61.1 % (2261) of the rise since early this past summer.

There are several reasons I have come to this conclusion, including Stohastic divergence on the daily chart, complete or almost complete EWT patterns and heavy overhead resistance. We also see weakness in other indices, such as for example the NDX or the Nordic indices.

My first option of interpeting the past uptrend since early this past summer is that it has been a 5 wave structure, which could imply more upside later on. So for the moment, I will consider this move as a correction within a larger bullish move that isn't finished yet.

I will be looking to build short positions in the market early this week for a shorter term trade, days to a week or two, either on reversal after initial strength or on bounce after initial "flush". Ideally I want to come in as close to 2600 as posssible since my losses - if I am wrong - would be much smaller that way, but at the same time the market has to show weakness.

If the market goes higher than 2615 I will be worried that the market is going to go a lot higher and that the uptrend is in now way finished.

The risk to this trade is that the market after a pull-back breaks above the 2615 area, which would imply that this leg of the uptrend is extending. This is nothing I would want to be short, but rather set up a long position trade.

What do you think?

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