The market crash is coming?
Will the market crash in Q4 2020? Let us examine this theory with the most important instrument charts. First of all, Gold is one of the instruments that most of the traders are considering to be a safe haven. But if you look at the chart you can see that Gold was going higher along with the most important world Indices SPX. NASDAQ, DAX, NIKKEI…If we look at the chart now we can see that it is close to a downside breakout, testing the channel support line 1920. So now is the question will Gold continue its positive correlation with Indices and reverse lower or it will start to act as a safe haven? That will be the first sign of an incoming crash.
The Dollar (DXY Index) is extremely negatively correlated with Indices (when SPX is falling USD is going upside). Recently DXY is testing a strong upside resistance 93.40 and it is basing for the reversal higher. So a break and confirmation of a break above 93.50-94 zone will be a clear indicator that the USD will gain across the market. That will also mean that Indices are falling.
Stock Indices? Let us see what insiders are doing now at the highs, for example, Kimble Musk, Elon Musk Tesla owner brother sold a quite portion of his shares:
On Sept. 1, Kimbal Musk sold 36,375 Tesla shares at a weighted average price of about $482.59, according to a MarketWatch calculation of data: https://t.co/yw8bvj8nbn
— MarketWatch (@MarketWatch) September 4, 2020
Quite aggressive selling in the last couple of days in tech stocks led to a break of the NASDAQ narrow upside channel 11700 and a test of the strong upside support 11050. A significant break below 11050 will lead to a big downside reversal to 9750.which will mean the crash. Even the fact that we had a break below the upside channel is indicative of further weakness.
The same strong selloff we saw in S&P500 which was brutally rejected from the long-term broadening wedge top and channel top 3600. This is a sign of a total rotation lower as it can be seen on a weekly and on a daily chart as well. A clear sign that the market is reversing and SPX will crash is going to be a break below the 3380 February 2020 high.
We can conclude that the next trading days will give us a key price action that will lead us to a complete market crash in Q4 2020, especially if we look at the Oil chart which was a good indicator of a crash in March and we can see that it is breaking below the consolidation wedge recently.
We have used the combination of the top-down trading analysis to get these key levels explained in the charts.
