FxWirePro: Sell DAX targeting 11500 area

Political uncertainties and developments in Europe are likely to weigh on the German benchmark index amid weakness in the economy.

• In last week’s election, pro-European Parties have secured two-thirds of the 751 members strong parliament, but the surge of nationalists parties have increased the risk of clashes between and Brussels and National governments. After the election, the European Commission announced that Italy would be charged €4 billion penalties should it breach the EU debt limit as the Nationalist government plan to increase the deficit to boost domestic demand. In France, President Macron’s ‘En Marche’ came second to nationalist Marine Le Penn’s ‘Rally Nationale’. Though nationalists ultimately lost the day, they won important battles in Italy, Hungary, France, Germany, and in the United Kingdom, where Brexiteer Nigel Farage’s Brexit Party won the majority of the seats.
• Economic development in the Eurozone favors selling as slowdown has become more prominent in recent months, especially in the manufacturing sector amid trade tensions with the United States. Eurozone’s largest economy Germany is witnessing deep recession in its manufacturing sector with end yet not in sight.
• Moreover, with election done with trade tensions between the U.S. and the EU likely to heat up.

Trade idea:

• Keep DAX short with following targets -11750, and 11550 area. The index is currently at 11890 area (GER30- CFD of DAX).