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XTB TRADEBEAT

DE30 makes a break higher after holding key level

Summary:

  •  DE30 has rallied back above 12220 
  • Market up by more than 1% on the day
  • Price holds above key technical level once more

There’s been a fairly strong move to the upside seen in the DE30 in the past couple of hours, with the leading German stock index recapturing the 12200 level. The move in excess of 100 points has not been backed by any fundamental news and comes on the back of what was a soft open this morning. 

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A look across all indices shows that the DE30 is the clear star performer with several other major benchmarks lagging behind. 

The market has once more held above the 200 day SMA - a widely viewed trend identification technique. Following the US election the market bounced from the 200 day SMA and has remained above it almost exclusively since. This strong uptrend has come under pressure in recent weeks however, with several attempts to break below it. The market looked to make a break below at the end of last month but the long wick on the candle reveals some strong buying pressure. 12340 is a key level to watch on the upside if price can continue to trade above the 200 SMA with it being nearly 7 weeks now since the market made a strong break below there. A break above 12340 would put the initiative firmly back in the bulls court with all time highs just below 13000 then a possible target.

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 The DE30 remains above the 200 day SMA on a daily chart. This can be seen to indicate an uptrend. Source: xStation

With the much anticipated ECB meeting tomorrow (see our preview here) and German elections just over 2 weeks away there’s plenty of event risk ahead. The market has been in what could be described as a summer lull since mid-July but today’s move may signal the end of this lethargic trade and may prove to be the start of a period of higher volatility going forward.   

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