Technical Analysis – German 30 index eases following bounce off 12,645; neutral picture in medium term

Melina Deltas, XM Investment Research Desk

The Germany 30 stock index has been plunging since yesterday after the significant pullback on the 12,645 resistance level. The sharp sell-off has driven the price below the mid-level of the Bollinger Band (20-day simple moving average), indicating further downside pressure.

Looking at the daily timeframe, the RSI indicator holds slightly below the 50 level and is sloping down. Moreover, the stochastic oscillator posted a downward crossover – the %K line moved below the %D in the overbought zone, suggesting that the price action would continue to head lower in the near-term.

As the price is developing below 12,645 the next level to have in mind is the 12,100 strong support, taken from the low on June 28. If there is a break below this level, it would challenge the lower Bollinger band, around 12,000 at the time of writing.

In case of an upward attempt and a jump above yesterday’s high (12,645) the index should see the 50- and then the 200-day simple moving averages (SMAs) at 12,740 and 12,780 respectively. If there is an upside break, the index would likely meet resistance at the upper Bollinger band, which lies near the 13,034 price level.

In the medium term, the neutral outlook remains intact, as the index failed to endorse the previous bullish structure after the price hit the 13,600 high.