Technical Analysis – GER 40 index shows signs of exhaustion
German 40 index takes a breather after dynamic rally
Selling pressures expected to intensify below 15,800
The German 40 index (cash) marked a three-week bullish streak, running from seven-month lows to a two-month high of 15,954.
The index has recouped more than half of the August-October downtrend, but the falling RSI, which seems to have topped in the overbought region in the four-chart, is warning that the latest downturn might be at an early stage. Note that the price could not overcome the 16,000 bar, which has been repeatedly blocking the way higher throughout the year.
Whether the bears will retake control might depend on the 15,800-15,840 region, which includes the 20-period simple moving average (SMA). If that floor cracks, the index could slide immediately towards the 15,700 constraining zone, while slightly lower, the 23.6% Fibonacci retracement of the latest upleg could halt steeper declines at 15,632. A break below the 50-period SMA and the tentative support trendline drawn from October’s low could be a bigger threat at 15,545.
In the opposite case, where the price successfully pierces through the former bar of 16,000 and exits the bullish channel on the upside, it may head towards the 16,145-16,200 restricted area. There might be another hurdle within the 16,280-16,335 territory, where the market peaked several times from November 2021 onwards.
To sum up, the latest downside correction in the German 40 index could face some continuity, as the latest bullish action seems overdone. The confirmation signal is expected to come below 15,800.Related Assets
Latest News
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.
