The European stock markets are narrowly mixed, today with DAX (GER30) and FTSE (UK100) posting slight gains, while CAC (FRA40) is down and the Euro Stoxx 50 up a marginal 0.04%. The UK100 is clawing back some of yesterday’s losses as Sterling retreats from yesterday’s highs seen in the wake of May’s Brexit speech. However, yesterday’s strong move south engulfed the six previous sessions and was a robust down candle at the close of the day. RSI having been in over bought territory for close to two weeks turned below 70, the MACD histogram failed to break the signal line and rolled over for the first time since mid-December, and the parabolic SAR turn yesterday too. All these technical moves are to be expected with such a strong move against the prevailing trend and they may be only short lived. However, the strength of the move was sufficient to suggest a SHORT position and entry was 7240 today, target 1 at the 14 DATR at 7155 and sits between the 23.6 and 50.0 Fibonacci level from the rise to Mondays high at 7360 and the gap from the beginning of the year between the 2016 close and the 2017 open. T2 is the 50 DMA and psychological 7000 level. The Weekly time frame remains positive; however there are overbought signs in the Monthly chart as the RSI breaches the 70 level.
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