Technical Analysis – GER30 index rallies above 200-period SMA

Anthony Charalambous, XM Investment Research Desk

GER30 stock index extended higher as the bulls overcame the key resistance of 12,150, where the 50- and 200-period simple moving averages (SMAs) crossed each other. The bulls seem to still be in control as backed by the upward sloping 200-period SMA and the recent turning up of the 50- and 100-period SMAs.

The short-term oscillators reflect positive momentum is intact. The MACD is ascending and has distanced itself above its red trigger line and into the positive region, while the RSI has flattened just around the 70 overbought level.

To the upside, if the buying persists, initial resistance obstacle could come from a region of peaks of 12460 – 12494 from September. Surpassing them, could jump the price to test the 12600 high of July 25 ahead of the 12661-swing peak.

If the bears retake control and reverse the price back down, the 12300 support could interrupt their efforts ahead of the 12235 level, which is the 23.6% Fibonacci retracement of the up leg from 11393 to 12494 and where the 100-period SMA also lies. Moving lower, the 12150 area could challenge the bears as it is captured in between the 200- and 50-period SMA. Next is the 38.2% Fibo of 12075 ahead of the 50.0% Fibo at 11942, followed by the swing low at 11886.

In brief, the short-term bias remains positive. A close above 12494 could repower the rally, however, a close below 11886 could shift the bias neutral-to-bearish.