GER30 set for expansion in volatility
GER30 Weekly Analysis
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1. The GER30 has charted a series of higher troughs (HT) followed by higher peaks (HP).
1.1 This is a defined uptrend.
2. The green trendline describes the trend's upwards momentum.
2.1 It has been touched twice and is thus regarded as tentative in nature.
2.2 To become a valid trend line, price must respect it a third time.
3. The RSI is on the bullish side of 50 (green rectangle).
3.1 Weekly Signal 1: The longer it maintains on the positive side, the greater the likelihood of further price appreciation.
4. Last week's candle (blue arrow) is a dragonfly doji.
4.1 Bears took price down to the low of the week before losing control to the bulls.
4.2 The bulls pushed price back up and the week closed with the bulls in control.
GER30 Daily Analysis
Source: www.tradingview.com
- Bollinger bands suggest a cyclicality to volatility.
- The Bollinger bands are squeezing (red arrows).
2.1 I.e., daily volatility has declined. - The bottom indicator is Bollinger BandWidth.
3.1 Due to the cyclicality of volatility, BandWidth has dropped to a level suggesting a calmness before a volatility expansion (left blue rectangle).
3.2 Previous BandWidth signals (red verticals) have coincided with expansions in volatility to the downside.
3.3 However, in these cases the GER30 was positioned in its weak channel between the lower blue and red bands. - The GER30 is currently positioned in its strong channel between the upper blue and red bands.
4.1 An expansion in volatility accompanied by a strong channel position is bullish in nature.
4.2 Daily Signal 1: Therefore, the longer that the strong channel is maintained the greater the likelihood of higher prices ahead. - The RSI is on the bullish side of 50 and not overbought (right blue rectangle).
5.1 Daily Signal 2:The longer it maintains on this side of 50, the greater the likelihood of higher prices ahead.
Russell Shor
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.
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