Looking across global indices from the US, Hong Kong and the EU, they all appear to be in very fragile areas.

Is there going to be a large drop soon?

The news of a meeting between China and Trump has given the market some relief, however it could have just papered over the large cracks in the global economy.

Technical Analysis

Dow Jones

The index is testing the broken ascending wedge formation. There also appears to be a head and shoulders formation signalling a potential break to the downside. If the head and shoulders pattern is correct, we could see a break to the 24600 level over the next couple of weeks.

Trade Set up – Entry 26800 – Stop loss 27050 – Take profit 1 – 26400 Take Profit 2 – 25800

S&P 500

This index is also re-testing the broken ascending wedge, a rejection from this level could see a significant drop. Similarly, there is also a head and shoulders formation on this index

Trade Set Up – Entry 2980 – Stop Loss 3000 – Take Profit – 2900

DAX

The German Index is also approaching a major resistance level at 12400, with a head and shoulders pattern forming. There is also a bearish divergence on the RSI. The direction of this index will depend largely on the ECBs actions on Thursday. Watch out for tomorrows post for the trade set up.

Hang Seng

The Hong Kong index is also at a crucial area re-testing the triangular formation at 26660. A rejection from this level could also signal further downside. No trade set up on this, we are just keeping a close eye.

As you can see numerous indices are in crucial areas. If they drop from this level it will form a lower high from the record highs the month previous. This could signal the start of a downward trend.

If you are trading the set ups, only pick 1 as you do not want to short 2 indices at the same time. Also ensure your stop loss does not go above the 2% risk of total equity.

The ECB interest rate decision on Thursday will give the indices some direction. Please keep an eye out for an additional post nearer the time.

Good luck!