Technical Analysis – GER30 index loses steam after fresh 23-month high; uptrend intact

Christina Parthenidou, XM Investment Research Desk

The GER30 stock index paused its rally after registering a fresh-month high of 13,307. The falling RSI, which is trying to exit the overbought area above 70, suggests that the bullish action may be overstretched and it’s time for a downward correction. The easing momentum in the MACD is endorsing the move as well.

Yet, in terms of trend, the fact that the price is above its upward-sloping simple moving averages (SMAs) and the Ichimoku cloud hints that the market may likely maintain its upward pattern.

The 13,140 level is currently curbing downside pressure. Should the bears significantly beat that barrier, the spotlight will turn to the area around 12,878 that acted both as support and resistance in the past. Further down, the 12,660 obstacle could attract a bigger interest as any forceful violation at this point would activate a neutral profile in the medium-term picture, probably pushing support down to 12,451.

Above the 13,307 top, the bulls may take a break around 13,400 before heading up to the 2018 multi-year peak of 13,600.  Beyond the latter, traders could look for resistance near the 13,700 psychological level.

Summarizing, GER30 index is expected to trade at a softer pace in the short-term but keep an upward direction overall. A decline under 12,660 could turn traders cautious in the medium-term window.