The question of the year..
The stock markets have had a big rally since Jan 2019, during each fall, people asks if we are in the beginning of a crash.
No one can predict it, all we can do is analyze the chart and try to Groping in the dark.
Here are some concrete steps that we can do on those days:
As we can see on the graph, the SPX price made new highs but the MACD shows new lows
MACD Divergence is a reversal pattern, that's not the most reliable pattern in the world but it can give us some indication.
Now let's make an action plan for the upcoming days:
That's the SPX today
As you can see, i drew 3 Support zones, They can be treated as milestones on the way down, If the price crosses those areas, we might heading down to a serious down trend.
Support zone 1 - Trend line + 200 days moving average, breakdown of this area will provide the first "crash" signals.
Support zone 2 - This support zone contains previous resistance and support areas.
Support zone 3 - This area can be the last breath of 2019 rally, breakdown of this area and we are probably going all the way down..
How to trade on those days?
1) Stay out - 2-3 days off can be a money saver.
2) If you still want to trade, make short term positions, don't be in a trade more than 2-4 days.
3) Watch out, your trading against the big trend, choose each trade carefully, be very picky and don't compromise.
To sum up:
If you know how to trade during such days, you can do a lot of money, just need to trade carefully, If you're not sure, stay out and wait for clear down or up trend.