From Hao Sun at Trade with Precision:

One of the most widely traded indices in Europe is the Germany 30 index because of it high liquidity and volatility. I would like to share my analysis on this market as I see potential for a move in the coming days / weeks and I want to position myself accordingly.

The index has reversed into a downtrend on the monthly chart with a series of lower highs and lower lows printed on the chart below. If I can get an entry to the short side at the right price while the downtrend is in its infancy, then the potential reward could be good. Last month’s candle was an indecisive candle that could have signaled exhausted buying momentum and sellers stepping into the market.

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The main thing that draws my attention on the weekly chart is price’s inability to rally away from the 10,000 psychological level over the past few weeks – which could be a sign of weakness. Although technically the weakly chart is still in an uptrend, as long as this 10,000 level continues to act as a level of resistance, then price is more likely to move lower from here.

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Yesterday’s price action on the daily chart is another testament to the higher timeframe weakness. Price gapped up, opened above the high of last Friday and broke above 10,000 level during the day session but collapsed lower to end the day decidedly bearish. In fact, sellers were able to push price below the 10,000 level and the day closed close to the low of the day.

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The key point on the daily chart to watch will be the 6th May low; at 9,734. If price breaks that low, then the daily chart will technically be in a downtrend. I would then anticipate price to move lower with a short term target of 9,442 – which is a support level formed on the 7th April following on from that an intermediate target of the 9,000 psychological level.