DE30 Analysis: Slower German business activity bearish for Germany Stock Market

December 21, 2018

By IFCMarkets

Slower German business activity bearish for DE30

German private sector activities expansion slowed in December. Will the DE30 continue declining?

German economic data were negative recently: growth of activity in private sector slowed in December according to preliminary data when a slight acceleration was forecast. Markit’s composite purchasing managers index for Germany slipped to 52.2 from 52.3 when an uptick to 52.4 was expected. Expansion slowed in both manufacturing and services sectors. Slowing growth is bearish for DE30.

DE30 descent below MA(50) intact 12/21/2018 Technical Analysis IFC Markets chart

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On the daily timeframe the DE30: D1 is below the 50-day moving average MA(50) which is falling, this is bearish.

  • The Parabolic indicator gives a sell signal.
  • The Donchian channel indicates downtrend: it is tilted lower.
  • The MACD indicator gives a bearish signal: it is below the signal line and the gap is widening.
  • The Stochastic oscillator has breached into oversold zone, this is bullish.

We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 10480.58. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian channel at 11091.03. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (11091.03) without reaching the order (10480.58), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary

Position Sell
Sell stop Below 10480.58
Stop loss Above 11091.03

Market Analysis provided by IFCMarkets