Technical Analysis – GER 40 index slumps to 2022 floor
The German 40 index (cash) unlocked an almost two-year low at 12,347, set on a pace to re-activate its 2022 downtrend below the 12,385 base, which kept the market in a horizontal move over the past six months.
At this phase, a rebound cannot be excluded as the falling RSI is within breathing distance from its previous lows and its 30 oversold level. The stochastics have already sunk below their 20 oversold number, but they keep trending southwards, warning that another bearish extension could develop before a potential upside reversal takes place. Likewise, the negative momentum in the MACD is foreseeing more losses ahead.
If the bears claim the 12,385 base, the sell-off could exacerbate towards the 12,000 psychological mark. A decisive close lower could then bring the 11,400 territory on the radar. Note that the 161.8% Fibonacci extension of the previous bullish correction is positioned within this area.
In the bullish scenario, where the index maintains a strong foothold at 12,385, some recovery could take place towards the 20-day simple moving average (SMA) and the nearby resistance area of 12,893. The 50-day SMA could be the next target at 13,180 and perhaps a prerequisite to retest the crucial long-term resistance trendline around 13,470. If buying interest intensifies above the previous high of 13,565 too, the door will open for the August peak of 13,792.Summarizing, the German 40 index is vulnerable to more downside as the bears are pressing the 2022 support zone. A continuation lower could pin a new lower low around 12,000.
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.