Technical Analysis – GER 30 index hits fresh record high; could stabilize in short-term

Christina Parthenidou, XM Investment Research Desk

The German 30 stock knocked January’s all time high of 13,639 on Wednesday and printed a fresh peak of 13,791 on Thursday.

With the price pulling below the upper Bollinger band, some caution could emerge in the short-term. Still, any weakness could prove temporary if the area between the middle Bolinger band, which is also the 20-day simple moving average (SMA), and the 50-day SMA currently near 13,300 rejects any move lower, shifting the spotlight back to the 13,600 level and the upper Bollinger band at 13,840. Running higher, the bulls could next pause near the 14,000 psychological mark.

Alternatively, a downside correction below 13,300 could last until the 12,946 bottom, a break of which could generate sharper losses probably towards the 12,660-12,451 restrictive zone that encapsulates the 200-day SMA. Such a move would also change the medium-term picture from positive to neutral.

Summarizing, the GER 30 stock index could stabilize in the short-term, with the 13,400-13,300 area expected to deter any decline. In the medium-term timeframe, the outlook is likely to remain positive if the price holds above 12,946.