Trading Plan for Monday, May 6th 2024

Trading Plan for Monday, May 6th, 2024

Market Sentiment: Uncertain, with bulls seeking further confirmation after exceeding a major resistance level on Friday. Consolidation and complex, level-to-level price action are likely.

Key Supports

• Immediate Supports: 5145-50 (major), 5136, 5116-13 (major)

• Major Supports: 5082-77 (major), 5067 (major), 5060 (major)

Key Resistances

• Near-term Resistance: 5176-86 (major), 5213 (major)

• Major Resistances: 5245 (major), 5272 (major), 5302-05 (major)

Trading Strategy

• Consolidation Anticipated: Expect a period of price discovery and complex, potentially choppy price action following Friday's strong breakout. Prioritize level-to-level trading.

• Long Opportunities: Due to the heightened risk, avoid chasing direct bids at support. Look for failed breakdowns of 5136 (ideally with a reclaim) or 5116 for potential long entries. In the event of a deeper dip, consider knife-catches at major supports (5082, 5067).

• Short Opportunities: Look for back-tests of 5213, or potentially 5176-86 (riskier) for short entries. Proceed with caution and be quick to take profits.

• Level-to-Level Focus: The breakout from the downtrend channel increases volatility and requires a disciplined approach. Trade the provided support and resistance levels rigorously.

Bull Case

• Holding Support: Defending the 5113-16 breakout zone remains crucial, with 5060 as the broader support floor.

• Reclaiming Resistances: Bulls need to push above the 5150 and potentially establish a base around that level for further confirmation. Breakouts above 5176-86, and ultimately 5213 would provide further bullish signals.

Bear Case

• Breakdown Signals: A convincing break below 5113-16 would signal a failure of Friday's breakout, inviting a deeper retracement. Watch for bounces/failed breakdowns around 5136 and 5116 for potential short entries. A breach of 5060 would be a significant bearish development.

News: Top Stories for May 6th, 2024

Impact on Stock Markets:

• Immediate Market Reactions: Markets react swiftly to news events, with geopolitical tensions often inducing volatility.

• Economic Indicators Influence: Market sentiment is shaped by economic indicators like employment rates and inflation reports.

• Central Bank Announcements: Decisions by major central banks, such as interest rate changes, heavily influence global markets.

• Corporate Earnings Reports: Quarterly earnings reports impact stock prices and market indices.

• Geopolitical Events: Events like elections and conflicts can increase market uncertainty and volatility globally.

Economic Policy Changes:

• Shifts in Industrial Policies: Increase in protectionist measures raises concerns about global growth.

• US and EU Policies on China: Alignment in economic security policies aims to reduce dependency on Chinese goods.

• Global Trade System Reconfiguration: WTO conference could reshape trade policies and impact global GDP.

• Regulatory Changes in Digital Trade: US withdrawal from digital trade agreements affects multinational corporations and data management.

• Environmental Regulations: International trade agreements mandate sustainability measures, transforming global operations.