World Markets Next Week: Finding Support at Low Levels?

Sun, Jul 20, 2014

Pack lots of junk food and Band- Aids and get ready for another volatile roller coaster ride in world markets in the new week, which will be here before you can ask “why Band- Aid?”

Because stock markets, as usual, will keep changing their trend, then in frustration you’ll bang your head against walls, then you’ll need a Band-Aid 🙂

Before that happens, let’s look back at what has been happening in global markets in last three weeks – that will make it easy to understand what we can expect from stock traders in next trading week.

The trend in last three weeks was like this-

(1) Range bound.

(2) Down Trend.

(3) Range bound

Now, pay attention to two range bound weekly patterns. Global markets showed BIG difference in their trading signals in these two weeks.

The first week’s range bound trading pattern was marked with “sell at high” opportunities. That meant, markets showed a tendency of turning down from resistance levels and best day trading opportunities came by selling at those levels.

Then we had a very clear downtrend and everybody was happy to just sell, sell and sell. At least I was 🙂

Then came the third week; the one that ended last Friday. Global markets again became range bound and most of the previous week’s losses were recovered by markets in this week. Many a times, many indexes fell on various global and local cues, but this week, stock markets showed a marked tendency of turning up from support levels. That means, in last week, “buy at low” became the best day trading strategy.



U.S. markets, European markets and especially Russian index MICEX10 traded in this manner where markets opened with a gap down and then climbed up to close in positive.

Indian markets followed this global trend but, their technical chart signals are showing divergence so I’m doubtful about their uptrend.

U.S. markets ended higher than the previous week’s levels and in the last session on Friday, managed to rally till the end with good volumes. European markets are following U.S. markets and have made positive signals in their charts. So the opening of the week in European and U.S. markets might be positive once again.

Global markets might follow these positive trends but not with much enthusiasm.

Overall:

U.S. markets might continue with “support at low levels” trading pattern.

European markets have taken a weekly breather in their bearish trend. Their trading range will be restricted within last week’s high and low points. These markets are making a “lower high” pattern in their wave, indicating that a bearish trend in still intact in these markets. Their major resistance will be last week’s highest level.

Indian markets might continue to follow global trend and will remain positive if U.S. markets trade in the green. But the inner strength in Indian markets is not visible and trading will be very volatile. These markets have also exhibited “but at low” intra day trend in last few sessions.

It will be interesting to see if global markets will show next week the same pattern of bouncing back from low support levels ? We’ll come to know that by early hours’ trading pattern in European markets. That is almost 24 hours away from now. But that will help to understand the intra day trading trick in global markets next week. Buy at low, or sell at high.

Wait till then and be ready for a choppy and action packed session in stock markets next week 🙂

See you then.



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