New escalation of global geopolitical tension. The decision announced at the beginning of the week by the White House to give the green light to Ukraine to use long-range US missiles against military targets in Russian territory has found a response in the Kremlin, which published a decree on Tuesday that opens Russia’s nuclear doctrine to new scenarios in which to fire weapons of mass destruction.
The tension in the markets has become evident with declines that exceeded 2.1% during some moments of the day in indices such as the Ibex 35 and the EuroStoxx 50, which They ended up approaching their key support levels.
However, attention in recent hours has focused on the EuroStoxx 50, but in its Total Return version, which takes into account the distribution of dividends, which has recently lost the bullish trend that arose from joining the 2022 lows. , 2023 and August 2024.
“This movement has opened the door for the main European reference to seek support at the August lows at 10,900, which are still almost 3.4% away,” explains Joan Cabrero, technical analyst and strategist. from Ecotrader who It is doubtful that a reliable upward turn can be seen in continental stock markets. without first putting that key support and red line to the test.
“In that support environment of the 10,900 points of the EuroStoxx 50 in its Total Return version is where I would be in favor of buying the European stock market again with the ammunition that they should have if they were able to reduce exposure a couple of weeks ago, when the Russell 2000 reached the 2021 high zone,” says Cabrero, who also recommends monitoring the behavior of the Dax 40 as one of the selective ones that can give clues to the market about where investors can move in the coming weeks.
The German index threatens to confirm a bearish head and shoulders pattern that would open the door to an additional 4% drop. This pattern would be confirmed if it loses the 18,900 points that, for the moment, are resisting the bearish advance, but which were already tested in Tuesday’s session.
In this sense, the possibility of a return to the August lows that the EuroStoxx 50 has opened in its Total Return version, after losing last week the bullish trend that arose from joining the lows of 2022, 2023 and August 2024 , coupled with the threat of the Dax 40 to build a bearish head and shoulders pattern that would open the door to an additional 4% drop, They only highlight in recent days the opportunity to buy again the European stock market that is presented to the investor.who – if these declines materialize – would face “a much more attractive profitability/risk equation than weeks ago,” explains Cabrero. “In fact,” says the expert, “if we have that fall that is emerging in the stock markets, it is likely that we will have a Christmas Rally easier to take advantage of than if there were no such drop.
More support levels
In the case of the Ibex 35, operationally the levels that Ecotrader has set as optimal for buying the Spanish stock market again are between 10,900 and 11,138 points, which is where it runs. the bullish guideline that has been guiding the increases from the 2022 lows.
For its part, in the cash version of the EuroStoxx the support environment of 4,675/4,700 points is the one to watch, “but if the Ibex 35 falls to 10,900/11,130 points and the Dax 40 heads to look for the September lows around 18,200 points, I fear that the EuroStoxx 50 could end up looking for the August lows around 4,420/4,480 points,” says Cabrero.
And all this would be seasoned with a Wall Street where no one should be surprised if a fall is finally formed that serves to alleviate the overbought resulting from the recent strong increases seen after the elections that They ended up elevating Donald Trump as the new elected president of the United States.
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