Trade view /
16 September 2016 at 4:44 GMT
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.
Entry: Buy a dip towards 2,971.
Target: 2,998, 3,025 and 3,053.
Time horizon: 1 to 2 days.
EU50.I hourly chart
EU50.I daily 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