Monthly Chart Analysis (Primary Trend)
1. Exponential moving averages are trend-following indicators.
2. The GER30's green 5-month EMA is above its orange 10-month EMA.
3. This puts the EMAs into bullish formation, suggesting that the GER30's primary trend is up.
4. The RSI is above 50 (blue rectangle), and on the bullish side of the indicator.
5. The green 5-month EMA has converged towards the orange 10-month EMA over the last month, suggesting a slowdown in momentum.
Weekly Chart Analysis (The Principle of Polarity)
1. The market has paid attention to the 15,550 level.
2. It acted as resistance from the end of January to the beginning of March this year, and has acted as support in May, July, and August (green shaded horizontal).
3. This is resistance turned support, also known as the principle of polarity.
4. The weekly RSI is around 48 (turquoise rectangle), which is very close to neutral, 50.
5. This is suggestive of an equilibrium of sorts.
6. This is unsurprising as the GER30 is near similar levels to where it was in April – effectively moving sideways over the last five months.
7. In effect, the GER30's primary trend is up (monthly chart analysis) but over the last few months its momentum has waned (weekly chart analysis).
Daily Chart Analysis (Stale Bull Build-up)
1. Bulls have bid price out of the bearish channel between the lower blue and red bands, and into the neutral zone between the two blue bands.
2. This is a movement of relative strength.
3. The daily RSI is attempting to push above 50 (black ellipse).
4. If the RSI can maintain above 50, and the candlesticks move into the bullish channel between the upper blue and red bands, this will be regarded as a positive, as the short-term looks to sync up with the primary trend, and another step forward by the bulls.
5. However, this may not be easy - the sideways movement over the last five months means many stale bulls have built up.
6. In effect, the bulls will have to fight through a resistance area.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.