GER30 Consolidates its Recent Rally
GER30 Analysis
In early-October, the German index had slumped to the lowest levels since 2020, but has staged a significant turnaround since then. October was its best month in two years and extends it recovery this month, with gains close to 15% during the third quarter, at the time of writing.
This week, GER30 broke above 13,500, the 38.2% Fibonacci of the 2021 High/2022 Low decline and the 200Days EMA. This puts the October highs (13,970) in the spotlight, but further recovery towards those of May (14,711) does not look easy at this stage.
So far, the weather is rather mild in Europe and Germany, which helps mitigate the impact of the energy crisis due to the war in Ukraine. However, there are still fears of a deterioration and a recession, while the cost of living remains very high, with Eurozone CPI hitting fresh record highs in October, according to last week's preliminary data.
Meanwhile, trade fears resurfaced this week, as China's imports and exports dropped last month, which is a key trade partner of Germany. Furthermore, shipping giant Maersk, lowered its guidance for the 2022 global container demand, expecting a 2-4% contraction. [1]
Furthermore, the European central bank after a late start, is now implementing the most aggressive tightening cycle in its history. It has produced 200 basis points worth of rate hikes since July's lift-off, expecting to raise them further.
GER30 has manage to look past these factors, but they can contain its advance. As such, a pullback to the 13,000 region and the EMA200 could be in the cards, but further losses have a higher degree of difficulty at this stage, since the downside seems well protected.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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