Technical Analysis DE30 : 2019-09-06

Improving German private sector activity bullish for DE30

Germany’s private sector activity expansion was stronger than expected. Will the DE30 stock index continue advancing?

German data lately were positive on balance: contraction in manufacturing sector slowed while the services sector expansion accelerated in August. Markit’s manufacturing PMI inched up to 43.5 from 43.2 in July, and services PMI rose to 54.8 from 54.5. Readings above 50 indicate expansion, below 50 mark contraction. Composite PMI rose to 51.7 from 50.9 in July, indicating accelerating expansion in private sector activity for August. Increasing private sector activity is bullish for Germany’s stock market index.

DE30 gaining above MA(50)  09/06/2019 Technical Analysis IFC Markets chart

On the daily timeframe DE30: D1 is rising after breaking above 50-day moving average MA(50).

We believe the bullish momentum will continue as the price breaches above the upper boundary of Donchian channel at 12071.45. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the lower Donchian boundary at 11486.40. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (11486.40) without reaching the order (12071.45), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary

PositionBuy
Buy stopAbove 12071.45
Stop lossBelow 11486.40

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