Markets often diverge from Reality, especially when they experience Euphoria and Panic. Sentiments have tremendous impact on Market Prices. The Behavior we are witnessing right now in Global markets is completely different from what’s happening on Economic front. Despite Global economy trying desperately to become normal, Global Markets on the other hand are already trading at new highs! Take a look at the Price Action of Nifty 50, Gold and S&P 500.
Nifty 50 – Price Action Broke the Structural Resistance
In Nifty 50 the structural Resistance, made on 2018 at 12000 was of crucial importance. Last month Index prices have broken the major resistance and closed above it. Right now, as you can see the chart, it’s continuing to make new highs.
Gold – Correction After Hitting New Highs
International Spot Gold’s major resistance was at 1900$. It’s a significant resistance level that’s created when Gold prices was trading at all-time peak during 2011. During the month of July this year, Gold Prices broke the long standing resistance Zone and closed at new high. But from last few months, Gold prices are trading sluggishly as they’re in correction phase.
S&P 500 – Price Action Trading Closer to Parllel Resistance
American Markets soared this year, as they continued the Big Bull market that started in the offset of 2008 financial crisis. We can notice it clearly on the S&P 500 Chart. One of the major hurdle for S&P 500 is the parallel resistance that’s structurally intact since 2018. Despite that, we can see it’s trading right now around new high.
Not just these, there are other global markets and assets that have breached all-time highs this year. In Situations like these, there’s only one wise move all good traders should consider – Try to reduce the risk in your positions. Markets often have a tendency to retrace or correct after making new highs. It may or may not happen this time. But it’s better to be prepared and focus on improving our Risk Management. Because if you’re an experienced trader, you’ll know that – markets move unexpectedly in unexpected way!
