The German 30 stock index is heading into the weekend with massive losses for the second time in a row despite pushing efforts to recover from a four-year low of 8,817 reached on Friday.
Somewhat encouraging is the fact that the RSI and the Stochastics on the daily chart are refusing to post fresh lows. Yet, for the sell-off to take a breather, the indicators need to show a convincing rebound above oversold levels.
Nevertheless, on the upside, there are several obstacles that could deter a proper rally from taking place. The area between 10,430 and 10,653, the latter being the 61.8% Fibonacci of the upleg from 8,695 to 13,826, could initially block any attempt towards the 50% Fibonacci of 11,260. Higher, the door would open for the 38.2% Fibonacci of 11,866, though only a closure above the 12,279 resistance would bring the long-term uptrend back into focus.
In the event the price retreats below the 9,310 former support area, the next level to watch would be the four-year low of 8,817. Slightly lower the 8,695-8,352 zone may also save the market from a steeper decline towards 7,400.
To sum up, the GER 30 index is expected to behave bearish-to-neutral in the short-term, simultaneously maintaining a negative profile in a longer timeframe.
