Current trend

The leading index of the European economy SX5E is correcting upwards at the level of 4261.0.

On Thursday at 14:15 (GMT 2), the European Central Bank (ECB) will publish a decision on the interest rate. According to analysts, the regulator may decide to fix the indicator at 4.25% in order to assess the consequences of tightening monetary conditions. Officials are aware that a long-term "hawkish" policy leads to serious pressure on the economy. Nevertheless, the consumer price index in the eurozone as a whole stabilized at 5.3% in August, while in Spain the indicator remained at 2.6%, which is quite close to the target 2.0%. Keeping the cost of borrowing at 4.25% will be a positive signal both for the economy of the region as a whole and for the business that makes up the stock index.

Local support for the SX5E quotes is provided by the bond market, where the yield on debt securities of leading European countries is below the August highs. At the moment, the rate on 10-year bonds of Germany is 2.635%, of Spain – 3.690%, of Italy – 4.393%, and of France – 3.172%. The current yield lags behind the August highs by a cumulative 3.32%, which slightly increases the attractiveness of securities in relation to bonds.

The growth leaders in the index are Vonovia SE ( 4.21%), Koninklijke Philips NV ( 2.87%), Intesa Sanpaolo SpA ( 2.76%).

Among the leaders of the decline are Adyen NV (-2.56%), SAP SE (-1.96%), ASML Holding NV (-1.59%).

Support and resistance

On the global chart, the index quotes are rising in an ascending channel with dynamic boundaries of 4560.0–4200.0.

Technical indicators hold a sell signal, which begins to weaken: the range of EMA fluctuations on the alligator indicator has begun to narrow, and the AO histogram, trading in the sales zone, forms ascending bars.

Support levels: 4220.0, 4080.0.

Resistance levels: 4310.0, 4420.0.

Trading tips

If the asset continues growing and the price consolidates above the local resistance level of 4310.0, long positions will be relevant with a target at 4420.0. Stop-loss – 4260.0. Implementation time: 7 days and more.

If the asset continues declining and the price consolidates below the local support level of 4220.0, short positions can be opened with a target at 4080.0. Stop-loss – 4260.0.