Trade of the week: long Germany 40

(AI video summary)

Current trade overview: long position

In the current market environment, a trading opportunity has been identified with the Germany 40 index. The strategy involves taking a long position based on recent technical developments and potential double bottom formation patterns, despite ongoing geopolitical headwinds.

The selloff began before the Israel-Iran crisis escalated, and Friday's session saw a retest of previous lows dating back to 23 May. This May level represents a critical line in the sand for medium-term uptrends across US dollar, European and Asian markets.

Trade setup

• Entry point: long Germany 40 at current levels around 23,300, following break above previous resistance
• Stop loss: set below the 23 May low at 23,267 on the daily financial bet, positioned to protect against a breakdown of the double bottom pattern
• Target: aim for an upside target between 23,900 and 24,000, targeting the 30-period simple moving average area

Risk-reward ratio

This trade offers a structured risk-reward opportunity, though it carries elevated risk given the ongoing geopolitical environment. The positioning targets a move back towards the 30-period simple moving average around 23,900-24,000 before potential further weakness.

While a retest of all-time highs appears unlikely in the near term, the technical setup suggests potential for a meaningful bounce from current support levels.

Market context

The Germany 40 has experienced significant volatility amid geopolitical tensions, with the index testing key support levels established in May. Despite ongoing conflict, technical indicators suggest the possibility of a short-term reversal from oversold conditions.

Previous trade updates include a successful long position in Brent crude oil which generated approximately 7-8% returns following a break of resistance. The GBP/USD trade initiated on 19 May remains active, with potential for stop-loss adjustments to recent lows.

Cautionary note: while this trade presents a structured opportunity, market conditions can change rapidly. Traders are advised to consider their risk tolerance and market outlook before engaging in this trade.