21 October 2020 (7:48 am IST)
20 October 2020 (10:17 pm EDT)
US stock markets had a positive closing in their overnight session, but the intraday trend was highly volatile, giving day traders profit making opportunities in both the up and down directions.
If you check the 5-minute chart of Dow Jones, you will find two clear trend lines; the first one starting with the second candlestick of the chart, going to the day’s high (bullish). There, price breaks the trend line and starts falling and a new trend line can be drawn; this time downwards. Near the session’s end, price becomes range bound and breaks the second trend line. End of the second (bearish) trade. exit from markets.
This was a classic example pf trading with the help of trend line. Please check the chart and see for yourself how this trade played out with tow profitable trades; one bullish and another bearish.
It also confirms the increasing volatility in US stock markets as the US presidential elections 2020 come closer. Right now, President Donald Trump is receiving huge crowd support in his packed rallies; while his opponent, former Vice President Joe Biden is keeping quite in the face of a big email scandal involving his son; Hunter Biden. This new turn of events is making US stock markets more than usually nervous.
Although, if you check the weekly charts of major US indexes, you’ll find that these indexes and trading on the upper side of the last two week’s trading range.
The same trading pattern is appearing in other major indexes of world stock markets. This looks like as if global stocks are ready to rally, with one foot on the starting line.
World stock markets are excited with the positive closing in US stock markets’ and are trading positive in different regions.
Almost all major Asian stock markets are trading positive at the time of writing. Only Shanghai index is down, but that too with minor numbers. SGX Nifty is 34 points up, hinting at a gap up opening for Indian stock markets.
US and European stock futures are highly positive, leading the positive trend in world stock markets.
How To Day Trade:
- World stock markets have become range bound within the last two week’s trading range.
- The bias is positive, in spite of some big drops in between.
- Day traders should take advantage of market volatility and trade with the short term trend line.
- This also means that they should trade only 2-3 times, with fewer lots and wait for a strong trending day when markets will have one trend through the session.
- A trend line will be very useful in showing this trend.
- Use trading strategies of range bound markets currently.
- This will involve using horizontal support and resistance levels. These lines can be draw using 5-hours and hourly charts.
- Buy at support and sell at resistance.
World stock markets have turned range bound and trading within the weekly range. Markets are highly volatile which is good for day trading. But a range bound markets is the worst thing for positional trading so stay away from taking overnight positions in these market conditions.