Stocks Bounce After the ECB Decided to Add More Accommodation

Stock market have been in a pullback mode lower since the US session yesterday and Dax30 even broke below the 50 SMA on the H4 chart. The picture was starting to look quite bleak for indices as the sellers kept control of the situation the entire day until the European Central Bank came along. The ECB decided to throw the towel and accept defeat regarding the promise to hike interest rates this year. that is a positive for stock markets since it would mean more investment since borrowing rates would remain lower. But, they also decided to add more TLTROs. ECB will start a series of two-year TLTROs in September and that means more free cash to go around.

This reversed the stock markets and sent indices higher. Dax jumped above the 50 SMA once again climbing exactly 100 pips. Although, it has given back half the gains and the price is deciding now whether to keep above or below the 50 SMA. Well, this is one thing which should be positive for stock markets for some time to come.