Technical Analysis – GER30 index consolidates above the 11,338 level; SMAs converge


Anthony Charalambous, XM Investment Research Desk

The GER30 index has consolidated in a sideways market in the last 20 sessions, as the 50-period simple moving average (SMA) has flattened and blended with the 100-period SMA. The index has currently moved into the Ichimoku cloud, trading around the June low of 11,607.

Directional momentum seems to have evaporated, something also reflected by the indicators. The MACD is flat at the zero line, combined with its red trigger line, while the RSI hovers at the 50-level. Furthermore, the Kijun-sen line has flattened completely, whilst the 50- and 100-period SMAs are tangled also suggesting no clear direction.

For a bullish scenario, the price would need to surpass the 50- and 100-period SMAs, on exiting the Ichimoku cloud, to test the 11,775 resistance, which is the 38.2% Fibo of the down leg from 12,600 to 11,266. If the buying interest continues, the 11,852 barrier could hinder the move up before encountering the 50.0% Fibo of 11,933 and the 200-period SMA, presently at 11,970.

Moving lower past 11,607 support and the 23.6% Fibo of 11,580, the price of the index could find support at the 11,338 obstacle. Next, the focus would move to the five-month low of 11,266, before opening the door for the 11,000 handle.

Overall, the index seems to have no clear direction in the short-term. For a bias to emerge, the price would need to fall below the 11,338 or above the 11,852.