One of the most widely used strategies among traders is “trend following”. The idea is to buy an asset when an uptrend is formed, and sell when a downtrend appears, on expectations that the momentum may continue. The Germany 30 stock index has been under pressure through the second half of 2018. The decline began from roughly 13,000 to now sit below 11,000. Taking a closer look at the index from the perspective of technical analysis, a potential trend following opportunity may be present.
On a weekly chart, a downtrend can be spotted with several key support and resistance levels. Last week, a strong down candle was formed, breaking out of the consolidation phase and breaching the support level at 11,000. Stepping into this week, an up candle appeared with a retracement of the failed attempt to pass 11,000. A rejection of this key psychological level together with a ramp-up of selling momentum signalled by the MACD (12,9,25) could mean further downward movement towards 10,500. If the selling pressure persists, the next level to watch could be at 10,000.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.