Moods on the global stock markets deteriorated this week after Donald Trump decided to reimpose tariffs on Brazilian and Argentinian steel. To make things worse, the US president said that he is in no hurry to sign Sino-US trade deal and may wait with it until after 2020 elections. However, Bloomberg reported today that, in spite of a heated rhetoric, two countries are getting closer towards the Phase One deal. Let’s take a look at how three major indices - US500, DE30 and FRA40 - cope amid elevated volatility.
US500 correction stopped at the key support
Let’s start with the S&P 500 index (US500). US500 sank almost 3 percent over the previous two sessions. However, it cannot be treated as a warning signal alone as the correction occurred after a 2-month rally that saw the index gain over 10%. Declines were halted at the key support level - 3080 pts handle, that is marked with the lower limit of the local 1:1 structure. A break back above the 77-period moving average (red line) could see the upward momentum accelerate. However, one should also keep in mind that a break below the aforementioned 3080 pts handle could lead to a bigger correction and a possible test of the next support at 2990 pts.
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US500 H4 interval. Source: xStation5
DE30 managed to climb back above 13000 pts
The German DE30 dropped 3.2% the recent local high (November 19). The aforementioned Bloomberg report boosted moods at the beginning of the European session and helped DE30 climb back above. Currently, the German index attempts to break above the lower limit of the earlier-broken consolidation range at 13150 pts. Should it manage to do so, an upward move towards the upper limit at 13300 pts may be on the cards. When it comes to support levels to watch, the first one can be found at 13000 pts. However, a break below it would pave the way towards the lower limit of the Overbalance structure at 12680 pts.
DE30 H4 interval. Source: xStation5
FRA40 finds support at the 5700 pts handle
Last but not least, let's take a look at the French FRA40. This index experienced the biggest decline out of the three we analyze today. French index dropped nearly 4.5% from November 19 high. In spite of a significant downward momentum, decline was halted at 5705 pts handle. Key level to watch for now can be found at 5705 pts . As long as the price sits above it, continuation of an upward move looks more probable. Upward momentum could increase once the price breaks above the low from November 21 (5825 pts). On the other hand, breaking below the 1:1 structure (yellow box)would be a signal for a bigger sell-off. In such a scenario the 38.2% Fibo level at 5645 pts would be the first support to watch.
FRA40 H4 interval. Source: xStation5
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