Thriller, votes and EUR/USD

EUR/USD was thrilled during yesterday’s trading and tried to push higher, marked an intraday high at 1.1110, but closed lower at 1.1040. The pair sloped under the range and couldn’t clearly break above the 200-day ЕМА. 

Monday’s mood seems to be extended into today as markets are already pricing the US votes. Initial results are showing a slight advantage for Mrs Clinton and therefore equities and commodities currencies were elevated. Meanwhile some macro data in Europe was release, but markets ignored it, as the attention is focused on the US election day.

The EUR/USD is feeling under great pressure and the pair fell to previous lows and was testing the 1.1010 level. Clinton’s victory might drive the pair downwards to October 25th low at 1.0850.

Indicators are placed within negative territory. RSI is currently at around 36% level and stochastic is showing oversold market, both confirming the bearish trend. 

Anyway the elections results have the last saying and the pair’s direction is still being uncertain. 

 

A new chapter is about to be written

The week ahead is expected to be exciting as the major event that will run the markets is the US presidential elections. The first data from the elections will be released (09:00 GMT) and inevitably will impact to the financial markets not only in the US, but in Europe and Asia as well. 

Theoretically and in general terms in case of Hillary Clinton win this would bring more predictability in both foreign and domestic policy in the United States. Clinton’s campaign  was largely predicting a continuation of Obama’s economic policy with some slight additions. This will increase US dollar’s strength against the yen, Swiss franc and the euro.

Donald Trump's intentions in foreign policy and the economy so far are not very clear. Therefore in case of win, that suggests that the US dollar will fall against other major currencies.

Who will be the new US president is of great importance for the energy sector in the US. Hillary Clinton’s victory would lead to shrinking of oil production, since her vision is that we must give priority to renewable energy sources. Donald Trump favors the traditional sources of energy and if he becomes president, the expected oil production in the United States will be maintained or increased - which will affect the price of the "black gold".

US Election Fever: Which way will it go? | ActivTrades Webinar Review

2016 so far I may say showed jitters and served enough significant events that influenced the markets. Brexit uncertainty, gold strength, China’s hesitations, the US dollar’s pains and gains, the expectations, will or wont central bankers raise the interest rates and the European banking meltdown. What a year!

But in fact the final quarter is proposing one of the biggest geo-political events – the US elections. Donald Trump’s surprise win of the Republican nomination, the hell-bent battle between him and Hillary Clinton, the inevitable change in political direction that came out. This event will take place on 8th November when the actual elections will happen. The time has almost come and chills the market participants to the bone, because we all now hear the ticking of the clock.

So, what does this actually mean and are you going to make the rest of this year your best year?
How to utilise the information to build a trading plan and how do we trade the US elections fever? This was widely discussed by the professional trader Paul Wallace on a free online webinar organized by my broker ActivTrades yesterday.

The following scenarios were pointed:

1/ In case of Clinton win markets will expect to see US dollar’s strength, gold weakness, initial US equity and index strength and A&D sector strength.

2/ A trump win we’d expect to see US indices weakness, US dollar weakness initially and CHF&JPY strength.

3/ A tie/small win for either side would be damaging for US prestige and therefore the markets. And then will follow weakness in US indiced and US dollar weakness, CHF, JPY&EUR strength.

The main currency pair that will affected by the US election, namely USD/MXN, AUD/USD, GBP/USD, EUR/USD, USD/CAD,  as well as gold and US indixes were technically observed.

In case you have missed this opportunity, worry not as the archive section is on your disiposal any time. 

If you want to be informed about future free webinars by ActivTrades you can stay updated by  following this link.  

GBP/USD bullish

Since the beginning of the week the GBP/USD pair performed excellent and is showing signs that the rally might be extended. During today’s session the pair pinned new fresh high at 1.2495, which is the highest level since 7th of October. 

Of course today a good pack of fundamental news was served and supported the Pound. The UK Markit services PMI for October showed very good numbers and BoE, as it was expected, announced that will keep its monetary policy unchanged.

RSI is indicating an extreme overbought market, but continues to support the bulls and another trigger seems to be the crossing the 50-day and 100-day moving averages. Stochastic is also showing overbought conditions and is slightly loosing strength.

The pair is facing strong resistance at 1.2480,second one is placed at 1.2775. Support is seen at 1.2230 and lower at 1.2090. 

Gold higher

During the past three weeks Gold was trading lower, but few days ago started to move to the upside. Bulls have found enough strength to conquer the strong resistance located at $1280 (Fibo 38.2%, formed by September 22th high at $1343 and October 7th low at $1241). Gold even extended its strong bullish movement and bulls attacked the Fibo 61.8% at $1304 to currently trade at $1305, which is an almost one month high.

Considering the fact that the US dollar is suffering now and is vulnerable by Fed’s decisions on monetary policy and also by the upcoming elections in the United States, market participants turned eyes to the safe heaven precious metal. 

RSI is placed now at the oversold area, pointing north and confirm the bullish trend. Stochastic is showing extreme an overbought market and is displaying lack of momentum.

In case of closing above $1292, the strong upward movement will be confirmed. Next resistance is located at $1307. Looking to downside first support is seen at $1287 and second at $1287.

USD/JPY turned to shade of pale

Bulls gave all the power they had and almost gave themselves one more chance. The last week  USD/JPY pushed above the important resistance level at 104.31. However, this upward movement was accompanied by bearish divergence, shown by MACD, which hinted of bulls weakness.

The fundamentals now support the appreciation of the US dollar, which would mirror the increase in this currency pair. The difference in the Fed’s BoJ’s monetary policy will continue to influence the dynamics in the pair. The Bank of Japan decided to keep its economic policy unchanged, but the yen react to the news significantly. 

Currently the USD/JPY pair fell to lower levels and pined intraday low at 103.787. As seen on the chart some further slides are very possible. 

RSI is located in the oversold area, currently around 24%. Momentum is also situated at the oversold territory and both indicators are displaying bearish slopes. 

Support is placed now at 103.50 and lower at 103.10. Resistance is seen at 104.20 and 104.62.

USD/CHF trying to recover

The market’s mood was elevated few minutes before the end of the last week because FBI decided to re-open the investigation into Hillary Clinton’s email case. The time nears to the elections and this is of huge importance to forex markets. 

The USD/CHF pair suffered sharp losses on Friday, having in mind that during the whole past week had downward momentum. The pair bottomed at 0.9857 and formed a falling star pattern, as seen on the daily chart. 

Currently the pair is trading around 0.9892 and bulls are seen attempting to conquer 0.9900 level. Anyway some of Friday’s losses weer partly reversed.

RSI is currently placed withing the mid area, around 53%. Stochastic is showing oversold market and is displaying bearish momentum.

The key resistance is placed now at 1.0000 and in case the pair could push above 0.9900 handle, buying interest might follow and lift the bulls’ desire towards this round number.      

Looking to the downside, the outlook is for testing the 200-day EMA, currently located at 0.9780. First support is seen at 0.9915, which if broken could slide the pair to neutral area with testing 0.9950 or higher.