Technical Analysis – GER30 index forms a floor around 12000; bearish in short and medium-term
March 1, 2018 4:26 pm
GER30, the blue-chip German index, touched a one-year low of 11691.60 on February 6 and since then has been forming a floor around the 12000 key area. The market has fiercely broken below its lower and higher-timeframe moving average lines and the Ichimoku cloud, signaling that a downtrend is underway.
In the short-term, negative momentum could still persist according to the RSI. The RSI is currently moving downwards in bearish territory after its failed efforts to crawl above its neutral threshold of 50. The Ichimoku indicators also support this view, with the red Tenkan-sen and the blue Kijun-sen lines heading south but showing no sign of meeting anytime soon.
Should the market weaken further, immediate support could be found at the 12000 psychological level which used to provide some base back in August. Any leg below this handle could retest the previous low of 11691.60, while if the index manages to unlock this level as well, the next stop could be at 11420, a mark last seen in December 2016. Steeper decreases could also shift the focus to the previous resistance level of 10875.
On the flip side, if the index bounces higher, the 20-day SMA at 12406 could stand a barrier to upside movements. Then prices could erase half of the recent downtrend, crawling back to touch the upper bound of the recent range (12665). Clearing that, could open the way to the 200-day SMA at 12737.90 and the 50-day SMA at 12891.50, while substantial increases above this area could increase bullish actions towards the 13000 key-level.
Regarding the medium-term picture, as long as the market trades below the 50-day SMA, bearish sentiment is likely to hold. MACD adds further to the bearish picture, as the indicator continues to fluctuate below zero. Potential declines, however, could come softer as MACD is currently trending above its red signal line.
GER30, the blue-chip German index, touched a one-year low of 11691.60 on February 6 and since then has been forming a floor around the 12000 key area. The market has fiercely broken below its lower and higher-timeframe moving average lines and the Ichimoku cloud, signaling that a downtrend is underway.
In the short-term, negative momentum could still persist according to the RSI. The RSI is currently moving downwards in bearish territory after its failed efforts to crawl above its neutral threshold of 50. The Ichimoku indicators also support this view, with the red Tenkan-sen and the blue Kijun-sen lines heading south but showing no sign of meeting anytime soon.
Should the market weaken further, immediate support could be found at the 12000 psychological level which used to provide some base back in August. Any leg below this handle could retest the previous low of 11691.60, while if the index manages to unlock this level as well, the next stop could be at 11420, a mark last seen in December 2016. Steeper decreases could also shift the focus to the previous resistance level of 10875.
On the flip side, if the index bounces higher, the 20-day SMA at 12406 could stand a barrier to upside movements. Then prices could erase half of the recent downtrend, crawling back to touch the upper bound of the recent range (12665). Clearing that, could open the way to the 200-day SMA at 12737.90 and the 50-day SMA at 12891.50, while substantial increases above this area could increase bullish actions towards the 13000 key-level.
Regarding the medium-term picture, as long as the market trades below the 50-day SMA, bearish sentiment is likely to hold. MACD adds further to the bearish picture, as the indicator continues to fluctuate below zero. Potential declines, however, could come softer as MACD is currently trending above its red signal line.
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