Technical Analysis – GER 30 index bullish at fresh highs; nears key obstacle

Christina Parthenidou, XM Investment Research Desk

The German 30 stock index (cash) found support at the 50% Fibonacci of the virus-led sell-off and crawled to a fresh high of 11,537 on Tuesday.

With the price deviating above its shorter-term moving averages (SMAs) and the ichimoku cloud at a time when the RSI keeps sloping upwards, additional gains could follow in the short-term. Still, in breathing distance is the 61.8% Fibonacci of 11,585, which could halt the buying pressure, sending the pair back to the 50% Fibonacci of 10,893. In case it fails to do so, the spotlight will turn to the 200-day SMA and the 12,272 resistance area, while slightly higher the 12,660 barrier will be closely watched if steeper increases emerge.

In the event the index retreats below 10,893 and back into the cloud, the tentative ascending trendline may immediately add footing, deterring the sell-off from continuing towards the 38.2% Fibonacci of 10,200. A close below the 10,000 round level may drive the price to the bottom of the cloud seen around 9,725, where any violation could see the retest of the 23.6% Fibonacci 9,345.

Turning to the medium-term picture, the bearish outlook is weakening as the market is approaching the 12,272 mark. A successful break above that point would resume a neutral profile.

In brief, the German 30 index could maintain positive momentum if it successfully clears the 11,585 barrier. Otherwise, the bears could retake control, shifting the focus to 10,893.