LONDON, Sha'ban 12, 1435, Jun 10, 2014, SPA -- European stocks paused early on Tuesday after a three-day winning streak fuelled by a package of measures from the European Central Bank, with a key regional index seen as overbought
on a technical basis, Reuters reported.
However, the RSI is tagging lower highs in the overbought
zone, indicating some weakness in the index.
This week the result of ECB session will be the most remarkable factor for the markets - in case the European bank does not justify hopes of the investors for any kind of stimulation measures that might trigger correction due to current conditions of markets being overbought
Of the 10 major stocks overbought
by foreign investors yesterday, financial stocks accounted for five.
However, the upper and lower lines (marking the overbought
and oversold levels) are at the 80 and 20 levels.
The yield on the benchmark 10-year Japanese government bond closed slightly higher Monday as market participants saw bonds as overbought
and were tentative ahead of a five-year bond auction later this week.
On 12/03 we stated our opinion that, given the then substantially overbought
condition of the McClellan Oscillator, it was likely the equity markets would see a drop in prices regardless of the Fed's decision on interest rates.
Well yes, it is possible, but the PSEi is nearing overbought
levels in bought daily and weekly chart readings which means it may not have enough lasting power to keep it hoisted above this range unless a preparatory pattern (new wind up) can be made,' COL said in a research note.
Last week the Capesize Index was leaning towards a bearish technical from a momentum perspective, which was overbought
whilst at the bear trend line.
Meanwhile, the RSI has begun to trend lower from the overbought
zone, indicating that the market may witness some correction over the short-term.
The FTSEurofirst 300 index was also nearing "overbought
" levels, with its Relative Strength Index (RSI) - a technical momentum indicator that determines overbought
and oversold conditions - having hit 68.
First, the market still is overbought
, which raises the possibility of downward correction.