Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Short term
Trade view / 06 December 2017 at 11:00 GMT

Bear flag in Eurostoxx says more downside ahead

Technical Analyst / FuturesTechs
United Kingdom
Instrument: EU50.I
Price target: 3425
Market price: 3540

The Eurostoxx 50 is the benchmark index for European Stocks and one of the most actively traded futures contracts in the space. It topped out in November and has since sold off from 3,703 to 3,511 on Friday. 

We bounced from there, but only back to the bottom line of a bear flag that I've had on my chart for a while now. This gave a fresh sell signal last week and the classic measuring technique attached to this pattern suggests the market can sell off to 3,379. 

I have a more achievable target ahead of that at 3,430, where we have a Fibonacci level and a gap to fill.

Management and risk description

The initial risk on this trade is 40 ticks, which compares favourably to a reward of 110 ticks (better than that if you manage to run it to the second target as well). 

Once below 3,522 and 3,511, move the stop to entry and watch for updates.


Entry: sell around 3,540-50 (currently 3,540). 

Stop: above 3,585.

Targets: 3435, maybe even 3,380.

Time horizon: one or two weeks.

Daily chart showing the bear flag:
Eurostoxx 50 Daily
Weekly chart (this has an uptrend line on it, which is my main worry about this trade. It's at 3,523 this week):
Eurostoxx 50 Weekly

— Edited by Michael McKenna

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Non-independent investment research disclaimer applies. Read more
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06 December
jcsousa jcsousa
I'm in, thanks Clive.
07 December
Clive Lambert - FuturesTechs Clive Lambert - FuturesTechs
Got a bit "squeaky" there... at least we know the stop is in the right place....
07 December
jcsousa jcsousa
Yes it really does, but i'll keep until the end (more one or two weeks) unless it will arrive to the stop.
08 December
Clive Lambert - FuturesTechs Clive Lambert - FuturesTechs
Stopped out. Clearly you can't keep a good bull market down. Just look at Bitcoin!
08 December
jcsousa jcsousa
Yes, our fears was confirmed. Best luck on next time. I'll be looking forward waiting for tradings ideas from you.


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