Weaker German data bearish for DAX
Expansion in German business activity slowed in May. Will the DE 30 continue declining?
Recent German economic data were negative on balance after the first quarter GDP slowed to 0.1% over quarter from 0.6% in Q4 2017. While unemployment declined in May, composite PMI declined to 53.4 from 54.6 in April. And manufacturing sector expansion continued slowing in June while flash services PMI rose to 53.9 from 52.1 in May. Weaker economic data are bearish for DE30.
On the daily timeframe the DE30: D1 is below the 50-day moving average MA(50) which is falling, this is bearish.
- The Parabolic indicator gives a sell signal.
- The Donchian channel indicates no trend yet: it is flat.
- The MACD indicator gives a bearish signal: it is below the signal line and the gap is widening.
- The Stochastic oscillator has breached into the oversold zone, this is bullish.
We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 12446.35. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the last fractal high at 13182.78. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (13182.78) without reaching the order (12446.35), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.
Technical Analysis Summary
Position Sell
Sell stop Below 12446.35
Stop loss Above 13182.78