CN50 - Possible Head & Shoulder formationOANDA:CN50USD
Trade Idea
CHN50 - Intraday - We look to Sell at 13650 (stop at 13750)
Short term momentum is bearish. Price action has posted a Doji candle and is neutral for short-term sentiment. Bias is mildly bearish today but we need to see a break of 13300 to confirm the downward pressure. In line with the possible early stages of a head & shoulders pattern and the strong rejection of gains, we look to set shorts in anticipation of a swing lower.
Our profit targets will be 13350 and 13150
Resistance: 13600 / 13700 / 13800
Support: 13320 / 13250 / 13150
CHINA50 trade ideas
Stagflation - US and global recession in 2020Stagflation
Last summer, economist Nouriel Roubini and Brunello Rosa identified 10 potential downside risks that could trigger a US and global recession in 2020. Many involve the United States.
Trade wars with China and other countries, along with restrictions on migration, foreign direct investment, and technology transfers, could have profound implications for global supply chains, raising the threat of stagflation (slowing growth alongside rising inflation).
Oil risk
With Iran sanctions and the Gulf of Oman tanker attack, we can add potential oil spikes as a supply-side risk. Oil price rise could threaten aggregate demand and thus consumption growth because tariffs and higher fuel prices reduce disposable income.
While there is no one way to predict a recession with technical analysis, there are ways to begin tracking multiple indicators that may collectively stand a much higher chance of predicting accurately the probability of one within a given time frame.
The slope of the yield curve
Yield curves don't typically invert. When they do, it creates an anomaly worth looking at. An inversion occurs when the yield on short-term Treasury securities exceeds the yield on long-term Treasury securities. While it might not seem like much at first glance, the inverted yield curve is actually a rare occurrence that can act as the bellwether for an economic recession.
For more information please refer to my analysis: Yield-curve-Employment-rate-VIX-Volatility-Buffet-Indicator/
The Boyds economic recession model is triggered by a yield curve inversion (seen as red on the graph).
Employment rate
In contrast to a narrowing of the spread between short- and long-term Treasury yields, a low unemployment rate usually suggests strengthening economic growth. However, historically, a trough in the unemployment rate also tends to be a reliable predictor of a business recession. Both the Civilian Employment-Population Ratio and Continued Claims (Insured Unemployment) are at all-time lows. We need to watch carefully because once a recession begins, unemployment rises sharply.
China H&S target reached and now a bullish wedgeLooks like an almost perfect bullish wedge here. The H&S had a target arond 12.600, which has been reached, so it could be a (temp) turning point. With this bullish wedge at the low, it seems to be a perfect setup. Ideally we see one more drop to test the low again. When seeing it turn a bit at that low, might get a chance to catch the exact low. But in theory, with a wedge we want to see 3 touches of the support line, which we already have here, so it could already have set the low.
This wedge would also perfectly fit the picture of a normal correction of the big drop we had the past days. Making like a right shoulder as we can see on the left.
China50 doesn't look good.China 50 looks pretty bad. Hope it's nothing serious.
The MegaMACD consists of simple modifications to the normal MACD, and has all the trend nonsense taken out.
It's singularly useful to quantify the "strength" of impulses. If it's not doing what price is doing (like here), then something is awry.
There are other reasons to short this thing outside of the MegaMACD bear div, but those aren't included.
Death Cross/Golden Cross/Death Cross and back to POControl This serves as a supplement to my analysis:
-S&P 500 Bellwether-for-US-economic-recession-The-Inverted-Yield-Curve
The Inverted Yield Curve
To my base argument I now include data that show younger treasury bond yields are yielding more interest than older ones. This is known as the inverted yield curve.
While it might not seem like much at first glance, the inverted yield curve is actually a rare occurrence that can act as the bellwether for an economic recession.
Adding these data to my core argument:
The S&P 500 rallied by about 25% since bottoming on December 24, 2018 during the Q4 2018 financial market turmoil.
From the depths of despair, the market has climbed higher because the Federal Reserve , meeting this week, has stopped raising interest rates, and there may—or may not—be progress on trade.
It’s also very possible that the market was simply oversold in the low-liquidity month of December. But since the rally, pessimists have been warning that the S&P 500 will reverse course at any moment—just as they have through this entire bull market.
S&P 500 has yet to top its September high and many from TEAM BULL may not see a reason to sell. I can’t prove that this approach is wrong. However I do feel that the odds are favouring another major decline, and soon.
I am not implying the market will play out the same dismal way that my graph illustrates historically, but to think that stocks can’t retest the lows of last year (or go lower) would be naïve.
What role will this level play for China?I'm personally thinking Long for Chinese equities, but we will have to see how this price level holds up in the near-mid term.
See callout bubbles. Always measure your risk and be okay with being wrong ; ) Wait patiently and get the price that you want. Use the market. Don't let the market use you.