28 September 2020 (7:40 am IST)
27 September 2020 (10:10 pm EDT)
World stock markets have started the new week with a positive trend. Last Friday, profit booking in the form of short covering sent almost all markets higher and a positive candlestick was formed on technical charts.
Today, in Asia session, all major indexes are trading positive, which continues the positive trend from that last session.
But, the global trend will depend on how US stock futures trend through various time zones. So, let’s focus on what US stock futures are telling us.
Dow Jones futures are up by 131 points (27,174) at this hour. That’s not any major gain. The previous close in these futures was at 27,043. Day traders should keep an eye on this previous closing level. If Dow Jones futures continue to trade above this level, then we can hope for a positive session in US stock markets and that will confirm the positive weekly trend in those markets. However, if Dow Jones futures fall below 27,043, the trend will become negative in these futures and could affect the current positive trend in world stock markets.
Nasdaq futures are in a better position, with 50 points’ gain and showing a positive, second candlestick after closing the last week with a positive candlestick on charts. Right now, Nasdaq futures are trading at 11,187. But, check the 5-hour chart of Nasdaq futures and you will discover that these futures also face a resistance near 11,221. Not only that, the 5-hour candlestick is very weak and small in size.
These facts warns us about the current positive trend in US stock futures, and day traders should remain cautious while playing today’s positive trend.
At the time of writing, US and European stock futures are positive. All major Asian stock markets are trading with gains. SGX Nifty is 80 points higher, indicating a positive opening in Indian stock markets.
How To Day trade:
- The early trend is positive in world stock markets, so day traders can think of buying near support levels.
- But, they must keep their minds open about the possibility of a trend reversal.
- As we know, world stock markets are following the trend in US stock markets and anticipate their trend by US stock futures.
- Right now, those futures are positive, but restricted. For day traders, the best trading strategy will be to follow the short term trend line.
- Buy if the trend line is rising from support.
- Exit if and when the trend line is broken near any resistance level.
- Wait for some time and let the trend settle down.
- After that, if the trend line picks up higher momentum again, you can enter another trade.
- However, if a new trend line is formed which points downward, then take short positions and trade with the short term downtrend.
World stock markets have started the new week with positive numbers in major markets and indexes. But the strength is lacking and it is possible that this trend changes as the session progresses.