What should you do?

Your answer to reduce speed and be ready to brake is correct because, according to German traffic rules, when you notice that the vehicle ahead is slowing down or braking, you must decrease your speed promptly and be prepared to stop if necessary. This ensures a safe following distance and helps prevent rear-end collisions. Moving to another lane or signaling unnecessarily is not appropriate here because the situation requires cautious speed adjustment rather than overtaking or signaling. Always focus on adapting your speed smoothly and maintaining control to respond to changing traffic conditions safely.