The German 40 index (cash) corrected higher after completing a bullish morning star pattern near its July low of 15,455 and just above the 23.6% Fibonacci retracement of the October 20222-August 2023 uptrend. The 200-day exponential moving average (EMA) made this area important to watch as well.
The rising RSI is an encouraging sign of an improving market sentiment, but the indicator has yet to confirm a bullish bias above its 50 neutral mark. Likewise, the MACD is still hovering around its red signal line despite its soft upturn, while the stochastic oscillator is not far below its 80 overbought level.
Hence, some caution is necessary because the price is testing its 20-day EMA just below the broken ascending trendline from October 2022 at 16,050. A decisive close above that wall could bolster upside pressures towards the record high of 16,530 registered in July. If the bulls stretch into the uncharted territory, they could aim for the 17,000 psychological mark, where the extension of the upper ascending line from October 2022, which stalled the uptrend in July, is positioned.
In the event that the price resumes its bearish short-term trajectory below the 200-day EMA at 15,416, it could depreciate towards the 38.2% Fibonacci area of 14,727. The 50% Fibonacci level of 14,170 might be the next destination if selling forces intensify.
Overall, the GER 40 index keeps fluctuating within a range in the short-term picture. A break above 16,530 or below 15,415 could provide the next direction to the market.
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