Late last month, the Europe Stoxx 50 index witnessed a downward movement reaching the lows of 3,330 to which the index was able to hold its own and bounced back up, however, the major resistance at 3,410 kept the index from rallying too much. However, the overall strength of the index proved too much for the resistance as it broke through it in quite the manner reaching a high of 3,470 3 days ago.
That was around the time that the trade war escalations between the U.S. and China, where the U.S. decided to impose an additional $200 billion worth of tariffs which stocked the fears of the market particularly those of the EU since they might be next on the chopping block. The consequence was that the EU50 opened below the purple upward trendline that has been drawn since late June. The index continued to move lower as it reached the mentioned resistance at 3,410.
Seeing that the level was such an important resistance holding the index from moving any higher, it would stand to logic that it would also be a decent support which happened that it was. After the drop, the index reached that resistance-turned-support and bounced right back up as it broke through the 100-hour and the 50-Hour Moving Averages. This move helps the index to focus on its next target at the 3,465 which corresponds to covering the gap that it formed after the Tariff escalation from the U.S.
Should the index be able to effectively break above the Purple trendline and continue upward, that would imply that the positive momentum is here to stay despite the current dip due to trade tensions. Moreover, should the index break below the resistance-turned-support at 3,410, the negative momentum would take over the index and continue to the lows of last month.
Currently, the best performers on the Euro Stoxx 50 are Deutsche Post (+2.35% at €28.3); ASML Holding (+1.76% at €173.00); and LVMH (+1.66% at €294.15). The worst performers are Fresenius (-3.14% at €66.56); Banco Santander (-0.89% at €4.62); and Banco Bilbao (-0.81% at €6.01).