Trading Plan for Monday, May 20th 2024

Trading Plan for Monday, May 20th, 2024

Market Sentiment: Bullish, consolidating after a historic rally.

Key Supports

• Immediate Supports: 5309-11 (major), 5302 (major), 5294

• Major Supports: 5267-72 (major), 5232-35 (major), 5208-11 (major), 5150-55 (major)

Key Resistances

• Near-term Resistance: 5329, 5333 (major), 5342-5345 (major)

• Major Resistances: 5375-77 (major), 5404-07 (major)

Trading Strategy

• Consolidation & Pattern Formation: The market is in a post-rally consolidation phase, likely forming a bull flag pattern between 5309 and 5342. Expect choppy trading with potential for breakouts or breakdowns.

• Long Opportunities: Wait for a test of 5309-11 support, followed by a bounce and reclaim above 5317, as a potential long entry signal.

• Short Opportunities: As always, avoid shorting green candles and breaking trends. If considering shorts, wait for a confirmed breakdown of 5302, then look for an entry around 5300 after a bounce or failed breakdown.

• Level-to-Level Trading: Focus on scalping profits within the range as the market consolidates. Exercise patience and avoid overtrading in this choppy environment.

Bull Case

• Bull Flag Continuation: The market may continue to fill out the 5309-5342 range, potentially leading to a breakout toward new all-time highs. Target 5359 and 5375-77 in this scenario.

• Adding on Strength: Monitor overnight action for potential flagging above 5309 and below 5219 as a possible entry point for adding to long positions.

Bear Case

• Breakdown Signals: A breakdown below 5302, with confirmation from a bounce attempt and rejection, would signal a more significant correction. Use caution with breakdown trades as they are prone to traps.

News: Top Stories for May 20th, 2024

🇨🇳 Steady Benchmark Lending Rates in China: Amidst ongoing efforts to stabilize the property sector, China's central bank has maintained its benchmark lending rates. This decision follows a series of bold measures aimed at addressing challenges in the property sector, highlighting the delicate balance the government seeks to maintain in its economic policies.

🏦 Federal Reserve's Upcoming Policy Meeting Minutes: Investors are keenly awaiting the release of the minutes from the Federal Reserve's recent policy meeting. This document is expected to provide critical insights into the Fed's economic outlook and future policy directions, influencing market sentiments and investment strategies.

🌐 Geopolitical Tensions and Trade Policies: The global trade environment remains tense as geopolitical issues continue to unfold. Notably, the U.S. President's decision to raise tariffs on Chinese goods has reignited debates over the economic impacts of such tariffs, with potential repercussions for international trade relations and domestic economies.

📉 Global Market Reactions to Mixed Economic Data: As the world economies emit mixed signals, global markets are poised for a potential summertime rally, albeit with an awareness of the risks that could derail such optimism. This scenario underscores the complex interplay of economic indicators and market psychology in shaping investment landscapes.

🏦 Regulatory Adjustments and Financial Sector Implications: Discussions among regulators about reducing proposed capital requirements signify a shift that could enhance the clout of banks. Such regulatory adjustments are crucial as they could affect the stability and operational strategies of financial institutions globally, reflecting broader trends in financial regulation and oversight.