I still prefer the downside but will of course keep an eye on natural gas and inflation concerns in Europe.
The Euro Stoxx 50 futures markets were closed on Friday but if you look at the chart as a whole you can see that we have been trading between the €3700 level below and the €3800 level above for the last week or so . For this reason we are forming a small rectangle, but I think that at this point it is only a matter of time before we have to decide on a bigger step.
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It’s worth noting that we are hanging around the 38.2% Fibonacci retracement level and recently pulled back from the 50% Fibonacci retracement level. The 50-day EMA is below the €3,900 level and it is drifting much lower. This shows how strong the downward trend is and it is worth noting that we have major economic problems across the European Union. Last but not least, there will be a potential disruption to the energy supply.
If the energy situation in the European Union remains precarious, it is difficult to imagine where the economy has a chance to move forward on a strong footing. The market will have to worry about these things, so I think it only makes a certain amount of sense that rallies will continue to see the 50-day EMA as a barrier.
Tuesday’s candlestick is a barrier to break. If we fall below the bottom of the candlestick, it is likely that we will try to reach the €3600 level, possibly even to the €3500 level. It would be an easy continuation of the general downtrend, but I don’t necessarily think it will be as brutal down as it was before. After all, that was more or less a panic for the lower tiers, and the stuff we’re worried about now is something that’s already reasonably well known. For that reason, it makes sense that we continue to fall, but it will be a bit more gradual. In fact, I would not expect the market to go higher until we break the €3900 mark. At this point, I still prefer the downside but will of course keep an eye on natural gas and inflation concerns in Europe.
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