The German 30 stock index (cash) crashed by almost 4% on Monday, recording its worst daily session since June.
The index tumbled below its 20- and 50-day simple moving averages (SMA), which have been curbing downside corrections from early August, and landed near the bottom of the Ichimoku cloud. The RSI also followed the price lower, crossing below its 50 neutral mark, while the MACD deviated below its red signal line, both pointing to a weaker trading in the short-term.
That said, the market maintained a a neutral structure in the short-term picture despite the downfall, while in the medium-term window, the higher highs and the higher lows from the 7,961 bottom continue to support the positive outlook. An aggressive selling below the 200-day SMA and the 23.6% Fibonacci of the 7,761-13,460 upleg at 12,163 would mark a lower low in both timeframes and hence weigh on the sentiment. In this case, traders may look for support near the 38.2% Fibonacci of 11,360.
Otherwise, the index should rally above the 13,461 resistance to build on its uptrend and hence resume a bullish outlook. Beyond the September peak of 13,460, the spotlight would turn tothe 13,826 record high and the 14,000 psychological number.
In brief, the short-term risk for GER 30 is skewed to the downside, though only a close below the 12,163-12,000 area would worsen the outlook in the short- and medium-term pictures.
