Is it all Doom & Gloom for Global Markets?

A current look at global markets

With recent market volatility due to various significant fundamental factors around the world, I thought it might be a good idea to have a look at what the markets around the world are doing at the moment, and potentially how a trader could interpret current events from a technical analysis point of view.

Given the influence that China has on Australia from an economic point of view, let’s start with the China 50 Index.

China 50 Index

Last Friday, the Chinese government intervened which helped the index rebound from the lower support line of a channel it’s currently trading within. On the daily chart you can also see that it formed a strong rejection of support. Whilst the current price action on the chart can generally be considered positive, it’s important to note that the China 50 index is in an established downtrend, trading under the 200 SMA.

Euro Stoxx 50 Index

The first thing to observe is a long-term downward channel that has been forming over the past 15 months. Of particular note, we’re seeing a series of lower lows and a significant breakdown through our support levels. To add to the negative outlook, price has also just started trading below the 200SMA.

If price cannot recover the broken support level, we can likely expect to see further weakness in the coming months.

DAX

The German DAX Index has pulled back to what I’d consider the neckline of a Head & Shoulder pattern, finding pretty solid resistance. As of now, DAX opened with a gap down, however being out of session for the German powerhouse, the gap may not be indicative of anything significant besides an overall negative sentiment. Typically, the outlook is turning quite negative for the European equity benchmark.

Russell 2000 & Nasdaq 100

First, the Russell has broken down through it’s somewhat sloppy, but clear uptrending channel and it looks like it’s on its way to test the lows seen in January and April. Notice the break through the channel also occurred at previous support levels. As for Nasdaq, it continues to hold its trend channel and is currently sitting on strong support levels.

Overall, the sentiment across globe in the Forex market and indices is pretty negative from a fundamental point of view, and as you can see the charts are reflecting this negativity. FTSE, ASX 200, SP 500, India, and more are showing significant weakness. Though it’s too early to label any as a strong bear market, you can confidently call it a well overdue correction.

 

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Source: Vantage FX Blog