Accelerating growth is bullish for German stock index
Accelerating manufacturing and services sectors expansion is bullish for German stock market. Will DAX continue rallying?
Euro-zone growth was upgraded last Thursday: euro-zone economy expanded 2.6% in the second quarter, up from the 2.5% rate of growth Eurostat estimated in August. Both manufacturing and services sectors of Germany accelerated expansion in August. European Central Bank was optimistic about euro-zone economy growth prospects. ECB President Mario Draghi indicated the central bank will reassess its stimulus program In light of improving economic data at its October meeting. Improving euro-zone economic growth is bullish for German stock index DE 30.
On the daily timeframe, DE 30: D1 has been rising after hitting a six-month low at the end of August. The price has breached above the resistance line.
We believe the bullish momentum will continue after the price closes above the upper boundary of Donchian channel at 12558. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the last fractal low at 11865.75. 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 probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (11865.75) without reaching the order (12558), we recommend cancelling the position: the market has undergone internal changes which were not taken into account.
Technical Analysis Summary
Position - Buy
Buy stop - Above 12558
Stop loss - Below 11865.75
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