GER30 Hits Resistance That May Prove Formidable in Short-Term

GER30 Weekly Chart (Resitance Level)

In the first half of November, the GER30's RSI broke above the green downsloping green trendline at 1. This suggested that positive momentum was expanding. This was confirmed by the index crossing above its black 30-week EMA and the EMA's direction shifting upwards at 2. These are regarded as positive developments and the longer that the weekly RSI maintains above 50, the greater the underlying momentum support for the GER30. However, the index has approached key resistance around the 16,500 level (red shaded horizontal), which may prove to be formidable in the near-term, given the daily chart.

GER30 Daily Chart (Overbought Condition)

The GER30's daily RSI is over 80, (blue rectangle), which is considered as overbought. This overbought condition comes at a time when the index has approached key resistance. As such, we will not be surprised to see the GER30 pull back or move sideways as the RSI normalises i.e. moves to levels below 80.

Conclusion

However, given the positive technical condition of the weekly chart, a pullback at the key reaction level will likely set the platform for the GER30's next move above the resistance level. Particularly if its RSI maintains above 50. I.e. it sets the scene for a potential "dip in an uptrend" scenario.