DAX Slips Below the 100 Daily SMA, as Coronavirus Spreads in Europe

Stock markets have been bullish since the beginning of last year. German index DAX has been finding support at moving averages on the daily chart during this time, particularly the 50 SMA (yellow) and the 100 SMA (green), on the daily chart.

We saw a deep pullback lower in summer last year, as the trade war escalated further and the sentiment turned negative in financial markets. But, the bullish trend resumed again, as US and China headed towards a partial trade deal. But, coronavirus is playing with markets and it induced another decent pullback at the end of January, when it exploded in China.

The sentiment started to improve, as the virus was being contained mainly inside China, and to a lesser degree in the surrounding countries. But, the outbreak in Italy over the weekend has sparked fears that it might turn into a pandemic in Europe as well.

As a result, European stock markets have turned bearish today and DAX has reversed and fallen nearly 800 points lower. Now, DAX is trading around the 100 SMA on the daily chart. It seems like traders are waiting to see if Italian authorities will keep coronavirus within the country.

If it doesn’t spread too much in Italy, then the 100 SMA might turn into support again and we will likely see a bounce off from here. If the virus spreads fast, then the decline will continue. So, we have to keep an eye on coronavirus cases in Italy, in order to trade stock markets, because there’s great potential on a long trade, if the situation improves that is.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
Related Articles
Comments
0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

HFM

Doo Prime

XM

Best Forex Brokers