Via Dana Lyons’ Tumblr,
After mounting a solid bounce off the September lows, European equity markets are now running into resistance.
First off, I placed the word ‘easy’ in the post title in quotation marks because, as anyone who has participated in the financial markets for more than 10 minutes knows, making money is never ‘easy’. Moving on. We use the term ‘easy money’ in markets when the price of the security or index has moved through an area of low resistance on a chart. For the Dow Jones European STOXX 600, this was the case from the September lows up until now, as there was little in the way of identifiable resistance on its chart (we are using the STOXX 600 as a European equity investment proxy as one cannot directly invest in the index).
Of course, the hard part is going long near the lows or at least somewhere along the way. It is also hard sometimes to stay long as prices chop up and down. After all, just because there is little in the way of resistance, it is no guarantee that prices will move all the way through the low-resistance area. For the STOXX 600, prices did indeed move all the way through such a zone, rewarding those smart, or lucky, enough to buy and stay in until now. That ‘easy’ money is over now, though, as prices are bumping into multiples layers of resistance.
On the chart, we can see at least 3 significant levels of potential resistance in the vicinity of current prices near the mid-380’s:
The breakdown level from mid-August The 61.8% Fibonacci Retracement of the post-April decline The 200-Day Simple Moving Average
This post was published at Zero Hedge on 11/20/2015 –.