May 13, 2013 / 7:21 AM / 5 years ago

Europe shares pause at 5-yr highs amid chart caution

LONDON, May 13 (Reuters) - European shares paused at five-year highs Monday, buoyed by some solid corporate earnings, although charts suggested near-term gains may be limited after a three-week rally that has left some indexes overbought.

Italian motorway operator Atlantia and miner Glencore Xstrata were among strong gainers after respective their quarterly updates.

They helped the pan-European FTSEurofirst 300 trade flat at 1,233.96 points at 0714 GMT.

The index, as well as key national gauges such as Germany’s DAX, was deep in “overbought” territory, its Relative Strength Index, a momentum indicator showed, meaning further gains may be hard to come by if short-term technical traders use it as a reason to book profits.

The DAX was flat at 8,282.09 points, or 0.8 percent off an all-time high of 8,358.23 points.

“Above 8,300, I think there’s strong resistance there. We can hit that but I don’t see further upside,” Ishaq Siddiqi, strategist at ETX Capital, said.

“If it falls below 8,200 I reckon we can see a further selloff. I don’t know how aggressive it would be but stock indexes are very overbought and for that reason the temptation to book profit is very strong in the market, especially because we don’t have any fresh catalyst.”

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