Technical Analysis – GER 30 index rises to 3-month high; positive but possibly overbought
May 7, 2018 10:26 am
The Germany 30 index has climbed considerably since late March and after coming close to revisiting the 15-month low of 11,691.60 recorded in early February. Earlier on Monday, the index touched a three-month high of 12,889.50.
The Tenkan-sen and Kijun-sen lines are positively aligned, supporting the case for a bullish bias in the short term. The Chikou Span, though, may be hinting to an overbought market, the implication being that a pull-back in the near term is not to be ruled out.
Immediate resistance might be taking place around the 61.8% Fibonacci retracement level of the January 23 to February 6 downleg at 12,868.78. This level itself was momentarily violated earlier in the day, but the area around it seems to be still acting as a barrier to the upside. Further above, additional resistance could come around the 13,000 handle, a level of potential psychological importance.
On the downside, support could come around the 50% Fibonacci mark at 12,645.24, with the region around it encapsulating other levels that may be of significance, such as the current level of the 100-day moving average (12,660.28), the Ichimoku cloud top (12,645.80) and the Tenkan-sen (12,599.90). But before price action reaches the area around the 50% Fibonacci level, a couple of bottoms from the recent past at 12,810.00 and 12,739.80 might provide support as well.
The medium-term outlook has turned predominantly bullish after the index crossed above the 100-day MA (and consequently above the Ichimoku cloud). A drop back below this level though, would set a more neutral medium-term picture.
Overall, both the short- and medium-term outlooks are looking mostly positive, though a signal for a possibly overextended rally in the short term is in place at the moment.
The Germany 30 index has climbed considerably since late March and after coming close to revisiting the 15-month low of 11,691.60 recorded in early February. Earlier on Monday, the index touched a three-month high of 12,889.50.
The Tenkan-sen and Kijun-sen lines are positively aligned, supporting the case for a bullish bias in the short term. The Chikou Span, though, may be hinting to an overbought market, the implication being that a pull-back in the near term is not to be ruled out.
Immediate resistance might be taking place around the 61.8% Fibonacci retracement level of the January 23 to February 6 downleg at 12,868.78. This level itself was momentarily violated earlier in the day, but the area around it seems to be still acting as a barrier to the upside. Further above, additional resistance could come around the 13,000 handle, a level of potential psychological importance.
On the downside, support could come around the 50% Fibonacci mark at 12,645.24, with the region around it encapsulating other levels that may be of significance, such as the current level of the 100-day moving average (12,660.28), the Ichimoku cloud top (12,645.80) and the Tenkan-sen (12,599.90). But before price action reaches the area around the 50% Fibonacci level, a couple of bottoms from the recent past at 12,810.00 and 12,739.80 might provide support as well.
The medium-term outlook has turned predominantly bullish after the index crossed above the 100-day MA (and consequently above the Ichimoku cloud). A drop back below this level though, would set a more neutral medium-term picture.
Overall, both the short- and medium-term outlooks are looking mostly positive, though a signal for a possibly overextended rally in the short term is in place at the moment.
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