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The German DAX has had impressive few weeks, with the leading German index breaking above the 14,600 level and increasingly looking like it’s moving towards the 15,000 region.
Many other European indices are recovering also, despite the Ukraine crisis, however, the GER40 is still lapping up the news from earlier this week that Russian forces are stopping some military assaults.
Technical analysis shows a clear case of bullishness. Meaning, that bulls are in charge and the charts show a number of positive price patterns and moves above or towards key moving averages.
The 200-day MA is a wonderful indicator for a breakout strategy. The GER40 has recently moved back above its 200-period MA and now looks to be moving towards its 200-day MA.
This sets up an interesting dynamic for April, as the GER40 is no longer oversold and could be fair value at current levels. As always, the asset will either drift towards its 200-day MA and reverse or breakout sharply higher.
Looking at sentiment towards the DAX, a bullish bias is still in play with 60 percent of traders expecting more gains. This provides the conditions for a continuation of the uptrend, as retail traders are still bullish.
Overall, if bears are not able to defend the 15,000 level in the coming trading days and weeks it should be raising a red flag for more gains in the GER40 index.
GER40 Technical Analysis
The GER40 index has activated a large, inverted head and shoulders pattern on the four-hour time frame but has yet to meet its downside projection. This usually means a continuation of the directional move is still going to take place until the target is hit.
Should we see the move higher continue, then I think we could see the 16,600-level reached, to complete the final target of the bullish pattern.
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The daily time frame shows that the German DAX looks very bullish and has ignited an inverted head and shoulders pattern, similar to the lower time frames.
The final confirmation needed for a medium-term buy signal is sustained move above the 200-day moving average. Meaning that a new bullish trend will then be well underway.
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