Germany 30 cash index (GER30) gained considerable traction after breaking the neckline (11,690) of the inverted head and shoulders pattern earlier this month, topping the rally at a six-month high of 12,194 on Wednesday. While, the RSI warns of an overbought market that could pressure the price lower in the short term, the uptrend off the 10,276 bottom may stay in place as long as the price continues to trade well above its simple moving averages (SMA).
The bulls would aim for the 12,458-12,600 resistance area if the market keeps upside momentum above 12,100. Moving higher, a crucial barrier is standing between 12,840 and 12,953, identified by the highs in 2017.
On the downside and below 12,000, immediate support could be detected near 11,840, while another leg lower would open the door for the 200-day SMA currently attached to the neckline of 11,690 and close to a former strong restrictive zone in 2018. Should the bears beat that wall, which is also slightly below the 50% Fibonacci of the long downleg from 13,205 to 10,275, sharper declines may emerge probably towards 11,400 (38.2% Fibonacci).
In the medium-term picture, the outlook is bullish as well given the higher highs and the higher lows from the 10,276 bottom. All eyes, however, are on the 50- and the 200-day SMAs since those seem to be planning for a bearish crossover.