Summary:
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Conflict between the US and China is getting more ugly
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Declines on stock exchanges all over the world
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FRA40 tests key support, and trades over 1.7% lower on Monday
FRA40 with a downward price gap
Today, during the Asian session, one could observe significant declines on the stock markets. Sentiment on the Old Continent is weak as well as pessimistic moods from the Asian trading hours spread to Europe. All of this is due to the escalation of the conflict between the US and China. According to the media reports, China is questioning sense of further negotiations with the United States after Donald Trump imposed new tariffs last week. Today's analysis will focus on the situation on the FRA40 and US100 indices. When it comes to the European index, a downward price gap was spotted at the beginning of today’s session. Declines accelerated following market open and a break below the 5535 pts handle. In turn, the price reached the key support, marked with the Overbalance structure and previous local lows. From a technical point of view, it looks like a good place for the correction to start but one should keep in mind that the overall trend is downward and declines could deepen.
Source: xStation5
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Source: xStation5
Declines on US stock exchanges
In the United States, we can also see stock being under pressure. Let's see what the situation looks like on the NASDAQ index. An upward trend structure collapsed in the previous week.. After the price smashed through the bottom of the Overbalance structure, the movement accelerated. The support level at the 38.2% Fibonacci retracement was broken in today’s pre-session trading. In case the current sentiment prevails, bears could target the 50% Fib level. Declines remain the base case scenario as long as the price is below the 7625 points handle (38.2% Fibo level). Trend would reverse once the price breaks back above the 7870 pts.
Source: xStation5
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