FxWirePro Call Review: DAX might face sharp selloff if key support breaks around 11800

Last two weeks’ selloff in the global stock markets has badly hit our bullish call on DAX/ GER30 (for CFDs). The index (GER30) has declined from 13600, in less than three weeks ago to 12355 as of today. In the past 10 days of trading, the index has declined more than 9 percent.

Back in January 2017, in an article named, “FxWirePro: Buy DAX, sell 10-year bund”, available at http://www.econotimes.com/FxWirePro-Buy-DAX-sell-10-year-bund-470271 we at FxWirePro recommended buying the German benchmark index DAX at the then current rate of 11600, while maintaining short positions in German 10-year bund as we anticipated that DAX remains undervalued when compared to the North American benchmark S&P 500, despite Germany’s strong economic performance, and the bund would suffer from ECB’s gradual tapering and higher inflation.

In a subsequent call review in May, named, “FxWirePro call review: Keep bund short, keep DAX long for another 1000 points” available at http://www.econotimes.com/FxWirePro-call-review-Keep-bund-short-keep-DAX-long-for-another-1000-points-683779 we extended that target for DAX by 1000 points from the then current rate of 12600.

In two separate subsequent articles, available at

https://www.econotimes.com/FxWirePro-Call-Review-DAX-target-extended-from-13600-to-14100-962075  and https://www.econotimes.com/FxWirePro-Call-Review-DAX-target-extended-from-14100-to-14700-1112378

We extended the buy side final target first to 14100 and then to 14700.

The call is still in the money, and we are not giving up yet on the buy side. We believe that this long-awaited correction would ultimately prove to be healthy for the market. However, if the index breaks below 11800 area, we would have to seriously reconsider our position as the index could take a sharp dive down if this key level is taken out.