Stock markets jump on G20 outcome! How high can they go?
The G20 meetings took place in Osaka, Japan on 29 and 30 June 2019. After the historic event was finalised, the first trading day back saw some global stock market indices jump higher. While US president Donald Trump and Chinese premier Xi Jinping didn't put an end to their trade tariff war, their comments have made some traders quite excited. Now the question is how high stock market indices can go...
In this article, we explore the outcome of the 2019 G20 meetings in Osaka, Japan, as well as the possible trading opportunities across global stock markets indices in this unique time. Let's get started!
Outcomes from the G20 meetings
Markets remained on edge in the run up to the G20 meetings as traders questioned which way Donald Trump's dive back into international diplomacy would take. While Trump met with North Korea leader Kim Jong Un, had breakfast with Saudi Arabia's crown prince and joked about election meddling with Russian president Vladimir Putin - traders were more focused on his comments regarding China.
After a key meeting with China's leader, Trump told reporters that the US and China were back on track with trade talks and that the U.S would not impose any new tariffs on Chinese exports while talks were underway. China also agreed to resume purchases of American farm products and other goods. However, even more surprising was that Trump backtracked on a ban on sales of American equipment to Chinese telecom giant Huawei.
The more positive tones between the biggest nations in the world, sent traders soaring back into global stock market indices. Let's have a look at few indices that are showing some interesting technical analysis signals.
How to Trade Stock Market Indices
With Admiral Markets you can trade on a variety of stock market indices across Europe, Asia and the United States, such as the DAX 30, Dow Jones 30 and Japan 225, via a product called CFDs, or Contracts for Difference. Essentially, this enables traders to go long and short on a market, such as a stock market index.
Trading the DAX 30 CFD
Source: Admiral Markets MetaTrader 4, DAX30, Monthly - Data range: from Jan 1, 2001, to July 1, 2019, accessed on July 1, 2019, at 2:40 pm BST. - Please note: Past performance is not a reliable indicator of future results.
In the above monthly price chart of the DAX 30 CFD, it is clear to see the long-term uptrend of the market. This is shown through the ascending dotted blue line which is commonly called a trend line. Price has frequently come back to this level, only for buyers to step in and push the market higher. Sometimes, the retracement back to the trend line creates a series of high points which can be connected to draw in a resistance line - this is shown by the three descending thick blue lines on the chart above.
After the more positive tones from the G20 meetings, the price has now broken above the resistance line suggesting buyers are now in control. Historically, when the market has broken these resistance lines the market went on to go higher. While past performance is no guarantee of future performance it does provide traders with an 'edge' in the market. In this instance, traders may now go down to the lower timeframes such as the weekly, daily or even four-hour chart to identify long trades in accordance with their specific strategy variables.
With the DAX 30 index already trading at 2019 highs, buyers remain the dominant participant in the market. The next target area would the 13,600 level which is the all-time level of the DAX 30 index - providing around 8% upside from July's opening price levels.
To learn more about trading strategies for this year visit our detailed Trading Strategies for 2019 article, so you can get started right away if you do not yet have a trading strategy to use.
Trading the Japan 255
Source: Admiral Markets MetaTrader 4, JP225, Monthly - Data range: from Jan 1, 2001, to July 1, 2019, accessed on July 1, 2019, at 2:51 pm BST. - Please note: Past performance is not a reliable indicator of future results.
In the above monthly price chart of the Japan 225 stock market index CFD, it is clear to see the long-term uptrend. What is most interesting to technical analysts is the fact the market frequently breaks a major swing high point and then retraces back towards it. At this level, some buyers enter and push the market higher once again. These are shown through the blue horizontal lines on the chart.
While some buyers have already stepped into the market off this support level, the more positive tones after the G20 meetings could encourage more buyers to participate at such a key support level and period of time. Traders may use this higher timeframe analysis as a trend bias and then go to the lower timeframes to identify long trading positions, in accordance with their trading strategy.
With the JP 225 index trading below its 2019 high of 22,375 made on 24 April, there is scope for buyers to remain in control at least until this level. This presents a near 5% upside from July's opening price levels.
Conclusion
Global economic tensions have created historic amounts of volatility in stock markets indices from around the world. The G20 meetings have helped put a pause in these tensions creating interesting short-term and long-term trading opportunities. While major stock market indices are showing the potential for further upside in the long-term, how long these positive tones from the G20 meeting will last for is uncertain. How will you be trading it?
With MetaTrader 5 you can trade on multiple asset classes, as well as access superior charting capabilities, free real-time market data & analysis, the best trading widgets available, and much more! To download MetaTrader 5 now, click the banner below and receive it for FREE!
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:
1.This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
2.Any investment decision is made by each client alone whereas Admiral Markets AS (Admiral Markets) shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
3.With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
4.The Analysis is prepared by an independent analyst Jitan Solanki, Freelance Contributor (hereinafter "Author") based on personal estimations.
5.Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
6.Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
7.Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
