GER30 Analysis

GER30 has been down-trending since the beginning of May and price was rejected on June 6th by the dynamic resistance line.

Price has also been respecting a dynamic support line which was hit on the 3rd of June and encountered a strong push up to resistance.

Figure 1: GER30 Daily Chart 

There’s now three options as to where price can go. Firstly price can respect the support line and break into zone B (Figure 3) which would signal the short term trend is still intact. If this happens we’ll ideally like the MACD and signal lines to be above the 0 line with a nice cross of the MACD and signal lines. These lines will also be diverging rather than converging which will give a strong buy signal. This needs to be teamed with support and some form of bullish price action at the zone. Now this market is up trending long-term but the dynamic resistance from the beginning of May (Figure 2) is also quite strong. I’d be looking to take profit at that line or the 12466 area.

Figure 2: GER30 4-Hour chart 

The second option is that price breaks into zone A, meaning price is respecting the dynamic resistance. If this happens we would ideally like price to retrace back to zone A’s bottom trend-line and then show us some form of bullish price action. Again, we need the MACD to cross the signal line and ideally they will both be above the 0 line and diverging.  

Figure 3: GER30 Zonal Projection  

If price decides to move into a range and head into zone C, we can take advantage by buying/selling at the range’s top and bottom support/resistance. Just be mindful the long term trend is bullish for the index, so shorts are more likely to be taken out. Once the range is broken to the upside or downside, we’ll ideally like the MACD to be diverging and will hold until the next available support/resistance, depending on which way price broke out.

As the technical levels have been drawn, please have in mind that fundamental risks such as the trade war between USA and China can influence the price to move differently and contribute to higher volatility at certain time during the trading sessions.

*Charts are created with TradingView, our partner in charting.

Written by Dan Randall, Technical Analyst. Email:
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