STOCKS NEWS EUROPE-Euro STOXX 50 halted by major resistances
The euro zone blue chip Euro STOXX 50 index's recent brisk rally has been halted by two major resistance levels, its 200-day moving average at 2,323 points and the 50 percent retracement of the March-June slump at 2,331, and a failure to pierce through the two levels could trigger a pull-back in the short term, chartists say.
The index, up 7 percent in a week, has been touching the 200-day moving average for three days, without breaking above it.
The index has also slipped into 'overbought' territory over the past few days with its 9-day relative strength index (RSI), a closely-watched momentum indicator, at 73.7. Seventy and above is considered 'overbought'.
"We're still in the resistance zone at the 50 percent retracement. Even though charts show that there's still a potential for a small rally on U.S. indexes in the short term, European indexes are heading into a consolidation phase, and it's better to wait for a pull-back to buy," Aurel BGC chartist Gerard Sagnier says.
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