Sunday, 10 February 2019
U.S. stock markets had started Last week with positive numbers but saw a trend reversal by the closing sessions.
That made world stock markets to retreat from their weekly high levels and turn range bound.
Technical charts had started signaling this trend reversal much before the trend actually changed and we had been pointing out these signals for our readers.
Since global trend is dominated by the trend in U.S. stock markets, it will be better to check what kind trend we can expect in these markets. By the end of the last week, major U.S. indexes had turned flat for the month and have created some negative signals.
Dow Jones closed right at its monthly 9-Day Moving Average while Nasdaq closed below this important support (7,070). We all know that a close below important Moving Average signals weakness in that entity. Even on 5-hours chart, Dow Jones and Nasdaq closed much below their 9-Day MA. Now, this MA will act as a resistance for these indexes and day traders should pay attention to how major indexes trade near this new resistance.
Various central banks are now pausing their rate hike plans or started cutting rates and talks of a global slowdown are picking up pace. The U.S. economy is moving at super sonic speed, but it looks like markets want free liquidity from central banks and so all this talk of a slowing growth at global level.
Small traders do not have to pay attention to whatever happens outside of technical charts. They can just focus on what charts are indicating and follow the trend.
Monday’s opening levels; in comparison with last week’s closing level, will indicate how the initial trend will develop in various markets.
A positive opening will keep markets range bound within last week’s high levels. 5-hours chart will indicate where major indexes are finding support or resistance.
A negative opening will indicate that markets are resuming the downtrend that started in the second half of the last week.
Day traders can use Bollinger Band to see the major support and resistance levels on higher time frames. For smaller time frames, pivot levels can show these levels.
In Asia, China markets will open after a week-long holiday and U.S.-China trade worries can affect those markets. Asian stock markets, U.S. and European stock futures may react to the trend in China markets.
We can expect a choppy and mixed opening trend in world stock markets on Monday. Based on how U.S. stock futures trade, the global trend will also take shape.