Stocks turned bearish this week amid deteriorating market sentiment, especially after the FED turned dovish on Wednesday evening. Stock markets should have rallied since it would mean that the FED won’t hike anytime soon and they won’t tighten the monetary policy.
But, the sentiment is affecting markets mostly right now and the sentiment got dented on the dovish FED. Today we had the Eurozone and German manufacturing PMI reports which showed another dip in this sector, particularly in Germany and the size of the decline got the market in a bit of panic.
That hurt the sentiment further and stock markets dived hard. [[DAX30]] lost nearly 200 pips from the top. We went long on this index a few days ago this week when it was finding support at the 100 simple MA (green). But, the 100 SMA was broken and it turnend into resistance yesterday.
Although, we still have one last protection for out trade. The 100 smooth moving average (red) Provided support yesterday and we saw the price bounce 60 pips higher from there. The negative German and Eurozone manufacturing data turned the sentiment even more negative and another wave of selling came, but the 100 smooth MA is still holding. Let’s hope that this moving average holds its ground and a reverse takes place, but it’s a tough trade.
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