TRADING THE UNITED STATES ELECTIONS
- London Guild of Trading
- Dec 3, 2016
- 2 min read
US ELECTIONS
In our last post, we spoke about the ‘immediate aftermath’ affect fundamental news has on currencies. We went into depth regarding the BREXIT and how to trade it. Well, the US elections had an enormous impact similar to the BREXIT, specifically on world currencies. Not as we initially had expected either. The sentiment around a Donald Trump win, was depicted as negative. Across most news websites and TV’s channels, it was deemed that a fall in the US DOLLAR would be the consequence. This is due to skepticism about Trump’s potential political decisions when he becomes president next year.
Bloomberg Stated: https://www.bloomberg.com/news/articles/2016-11-06/world-s-best-currency-forecasters-see-dollar-rout-on-trump-win
In addition, a Clinton win, would have seen the US DOLLAR rally, seeing it conquer other majors in the FOREX market. However, the complete opposite of what we all thought would happen - occurred. We’ve seen a 2 month high rally not to mention an overall upward moving dollar since it broke out of weekly consolidation in May early this year. The dollar index is on an upward move since Trump has portrayed his decisions to ‘Make America Great Again’, through investment and business settlements.
DXY (DOLLAR INDEX)
WHAT CAN WE EXPECT?
As shown in the chart above, the DXY has been constantly rally creating a VOID of prices from May 2014 until now. We've seen heavy consolidation over the past two consecutive years, however, the Dollar has now broken through this resistance channel, and headed higher.
When we see Trump enter the White House next year we could see further strength for the Dollar if he keeps to his word about following investment in major cities within America. The newest sentiment on the market is: 'Trump Rally Overflowed?', this phrase or similar, has been taunting traders to look for downward pressure on the dollar. We have seen in particular this week, a strength in both the Pound and the Euro. On smaller timeframes - Intra-day traders are making money off the back of a weak Dollar.
GBPUSD
WHAT CAN WE EXPECT?
Viewing a weekly chart of the GBPUSD pair, we see a huge amount of downside pressure. The pound since BREXIT has given traders enormous amounts of opportunity to buy into the Dollar and sell the cable short. However, now that we've hit a peak support zone, which has created a bounce in the market, our traders at LGT are looking for more upward moves in this pair. Following sentiment around a Trump rally being overbought.
Ideally, a break above 1.2800 level would deem a move higher towards our liquidity pool, which the market should obey.
At London Guild of Trading, it’s important to understand all areas of trading during economic events like the US ELECTIONS. Our analysts dissect and understand all key data which can impact the markets in order to create a profitable and consistent return of capital.
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