EUROSTOXX 50: The movement remains bullish

Above 3175.05 PTS the major trend remains bullish. 3514.54 PTS and 3627.71 PTS are in the line of sight. The breaking of 3175.05 PTS would cancel this anticipation and favor a correction toward 3118.47 PTS.

Opinion Short Term
Resistance 1 £3,514.54
Support 1 £3,175.05
Opinion Medium Term
Resistance 2 £3,627.71
Support 2 £3,118.47
Last Price 3365.6 PTS
MACD 51.04
MA 20 3288.22
MA 50 3163.4
Stochastics 86.28
RSI 60.3


The MACD is positive and above its signal line. This configuration confirms the sound positioning of the index. We can see that the bullish potential of the RSI has not been exhausted. As for the Stochastics, they are in the overbought area, making a correction likely in the short term. The volumes traded are less than the average volumes over the last 10 days.


The index is positioned to the upside. It is above its 50-day moving average. The position of the 20-day moving average (higher than the 50-day moving average) means that this index is reliable in the medium term. The first buy levels are on the supports situated at 3175.05 PTS, then at 3118.47 PTS; only the resistances, placed at 3514.54 PTS, then at 3627.71 PTS, could contain the prices.

Moving Averages (MA20 & MA50)

Moving averages are calculated by the addition of the closing price of the N last sessions divided by the number of sessions considered. They can be used to track daily, weekly, or monthly patterns. DayGraph uses 20 and 50 periods. Moving averages provide a good indication of the whole trend affecting an underlying. Reversing situations can be found on the upside and on the downside. Moving averages can constitute supports or resistances by themselves for spot prices.


The MACD (Moving Average Convergence / Divergence) reflects a difference between moving averages and thus makes reference to the ascendancy or not of the mid-term relatively to the short term. DayGraph uses 26 and 12 periods. Moreover, so as to estimate the variations of the trends, an auxiliary indicator (named signal line) is formed. It is based on an exponential average of the MACD on 9 periods. The advantage of this indicator is triple:

  • absolute position of the MACD
  • relative position to its signal line
  • existence of divergences.


RSI is the most popular speed indicator because it is one of the most relevant ones in localizing overbought and oversold periods depending on the investment horizon. A bounded indicator, the RSI calculates the relationship between the average of ups and downs for the days of the period under consideration with a mathematical approximation. Day traders use a 5-minute RSI, monthly market investors use a 5 or 9-day RSI, portfolio managers monitor the RSI for 14 days and some investment funds would even go to the RSI 34. The longer the RSI is, the less the overbought and oversold thresholds are distanced (20/80 for a 9-day RSI, 30/70 for an RSI 14). It also gives excellent divergence signals. DayGraph uses a 14-day RSI.


With a design close to that of the RSI, the stochastic indicators use a greater number of variables (highs and lows for the day). The slow %D used smoothes the variations of the base indicator that is too volatile. Paradoxically, the false signals are often more numerous than for the RSI. The main contribution compared to the latter is still notable though: when the stochastics remain stuck in an overbought area (above 75%) for several weeks, it is recommended not to follow the overbought indications of all the other indicators.

Bollinger bands

Bollinger bands are trading bands (upper and lower boundary lines) plotted at 2 standard deviation levels above and below a moving average. DayGraph uses 20 periods. Bollinger bands offer a measure of volatility and relative low and high, the bands widen during volatile markets and narrow when volatility decreases. They can provide strong thresholds: resistance for the upper band and support for the lower band.


Level that has a high probability of halting a fall on the time horizon considered, and consequently, possibly to cause a bounce.


Level that has a high probability of halting a rally on the time horizon considered, and consequently, to cause a correction.

This Technical Analysis is issued by Market Dynamics LTD authorised by the Financial Conduct Authority. The views expressed are those of Market Dynamics LTD only and not of Société Générale. Market Dynamics LTD is a French independent research bureau specialising in technical analysis. Market Dynamics LTD analysts are FTA or IFTA qualified. Market Dynamics LTD provides different retail investors, private banking managers, prop traders, and asset managers with commentaries, anticipations, and strategies according to their specific needs. All reasonable care has been taken by Société Générale; authorized by Autorité de Contrôle Prudentiel et de Resolution (the French Prudential Control and Resolution Authority) and subject to limited regulation by the Financial Conduct Authority in the UK; to ensure that all statements of fact and opinion contained in the Materials are fair and accurate in all material respects. Société Générale makes any representation or warranty regarding the accuracy of any information and is not responsible for errors of any kind. Any reproduction, disclosure or dissemination of the Materials is prohibited. The Materials are intended to give general information only and under no circumstances should they, in whole or in part, be considered or construed as an offer to enter into a transaction.

Technical analysis is issued by Market Dynamics Ltd, an independent research company authorised by the Financial Conduct Authority. The views expressed are not those of Societe Generale.