Short term
Trade view / 16 September 2016 at 4:44 GMT

EU50: Bounce off support indicative of more upside

Instrument: EU50.I
Price target:
Market price:
Background

The EU50.I put in a peak late last week and has been moving lower since then. Even though we can suspect, due to the wave count and time cycle, that this peak can be of a larger scale, it is yet to be confirmed that the medium-term trend has taken a turn for the worse.

Looking at the hourly chart, we appear to have a five-wave structure off the September 8 highs, a move that should be either the start of a downtrend or possibly have marked an end of an Elliott wave flat structure in a larger bullish trend. What we with a high level of confidence can argue is that following a five-wave decline we should see at least a three-wave bounce. This bounce should have started yesterday.

The EU50.I reversed yesterday almost spot on 2,944, which besides being a horizontal support level is a Gann pivot. As long as this level holds this market should be heading higher in the short term. We have an intermediate pivot at 2,971, which was cleared yesterday.

To the upside we have resistance at 2,998, 3,025 and 3,053.

Management and risk description

The plan is to buy a dip to or towards 2,971. The stop could be placed at 2,944 for a move higher into any of the resistance pivots 2,998, 3,025 and 3,053.

The risk to this set-up is obviously a larger downtrend in the making. An imminent and decisive break of 2,944 would indicate downside as far as to 2,890 at least.

Parameters

Entry: Buy a dip towards 2,971.

Stop: 2,944.

Target: 2,998, 3,025 and 3,053.

Time horizon: 1 to 2 days.

EU50.I hourly chart
EU50.I hourly chart
 
EU50.I daily chart
EU50.I daily chart
 

EU50.I daily development chart
EU50.I daily development chart
 

Source: Saxo Trader. Create your own charts with SaxoTrader; click here to learn more

— Edited by Susan McDonald


Non-independent investment research disclaimer applies. Read more
16 September
Johan Berntorp Johan Berntorp
A break back up above 2971 would be very positive from here.
16 September
yakcay yakcay
Johan, do you think there is still a chance it might go back up from here?
16 September
Johan Berntorp Johan Berntorp
Yes
16 September
Johan Berntorp Johan Berntorp
This is most likely the attempt.
16 September
Johan Berntorp Johan Berntorp
Got in too early....
16 September
Johan Berntorp Johan Berntorp
Stopped out.

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