Technical Analysis DE30 : 2018-10-26

[IFC Markets]

Weak German data bearish for DE30

Expansion in German private sector slowed in October. Will the DE30 continue declining?

Recent German economic data were negative on balance: German private sector growth in October slowed to its lowest level in more than three years. Germany’s manufacturing and services sectors’ expansion slowed: Services PMI fell to 53.6 from 55.9, and Manufacturing PMI declined to 52.3 from 53.7 in September. And German businesses’ sentiment about current conditions and their expectations for next six months dampened. Also a week ago German statistics agency reported wholesale prices index slowed its increase in September. Weaker economic data are bearish for DE30.

On the daily timeframe the DE30: D1 is below the 200-day moving average MA(200) which is falling, this is bearish.

• The Parabolic indicator gives a sell signal.
• The Donchian channel indicates no trend yet: it is flat.
• 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 11048.15. 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 11849.76. 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 probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (11849.76) without reaching the order (11048.15), 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 11048.15
Stop loss Above 11849.76