With that impressive run we saw on the Dow after the Midterm elections came to a close the focus turns back to U.S and China trade talks. The U.S market has moved lower since the Midterms as the market is waiting on direction from the hill.

Taking a closer look at the chart of Wall Street 30 we can see that there might be an inverse head and shoulders (H&S) technical set-up starting to evolve. Looking at last week’s Wall Street Wednesday note we can see that the outlook is still the same. If the H&S plays out in point 1.) then we can expect the price to move higher. If not, then the sell-off will continue as the outlook in point 2.) below.

Source – Bloomberg

Take note that the H&S technical pattern has not formed and that to enter the market to pre-empt the move might be risky at this stage. There are a couple of fundamental factors that needs to materialize to support the move higher, like a positive outcome from the trade negotiations between the U.S and China.

Image Source: Wolf of Wall Street

Remember that trading puts your capital at risk. Always trade cautiously and never above your means. 

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