22 September 2020 (8:00 am IST)
21 September 2020 (10:30 pm EDT)
World stock markets have changed their trend from range bound to a downtrend. This started with US stock markets in their overnight session, where Dow Jones broke its current range support and fell by more than 500 points. With this drop, this mega index is making a “lower high” pattern on technical chart, which confirms a downtrend in Dow Jones.
Nasdaq opened low but kept climbing up through the session and closed right where it has been closing in the last two sessions. So Nasdaq maintained its range bound closing but created a lower range. This tech index has already been making a “lower high” pattern, as we discussed in our previous post, so the trend in Nasdaq is also a down trend.
With the negative closing in US stock markets, Asia has also turned negative. All major Asian stock markets are trading negative at the time of writing. SGX Nifty is 30 points up after a big crash in its previous session.
World stock markets have started this week with highly negative numbers and weekly charts of major indexes are also making a “lower high” pattern, indicating that global markets are in the grip of a downtrend now.
US stock markets are falling due to profit booking by investors before their presidential elections in November, who are expecting very high volatility during that time and prefer to sit on cash rather than remain invested in stocks.
World stock markets are following that sentiment and trend.
How To Day Trade:
- Day trading is easy in trending markets.
- Traders should now change their strategy from a range bound markets to down trending markets.
- For this, they should wait for the price to rise, hit a resistance level and then fall again.
- This would be the best spot to open their short trade, then continue with the trend line.
- They can exit their trades when price breaks the trend line.
World stock markets are now clearly in a down trend. At the time of writing, US and European stock futures are trading negative. All major Asian stock markets are also down. (Japan markets are closed today). SGX Nifty is showing minor gains indicating a flat/ marginally positive opening for Indian stock markets.
We expect this down trend to continue in the coming days or weeks. Day traders must not go against the trend and trade with the trend line in bigger time frames.