After a long presidential campaign, USA’s deciding moment has finally arrived. This Tuesday, North Americans will decide on who will run their country for the next four years. Both candidates will have an impact on the financial currency market although a win for Trump will see the Dollar USA make a bigger downward move, because of the uncertainty that Trump will bring to the USA economy/politics. A Clinton win will see less volatility in the financial market, as it will be a continuation of president Obama’s presidency. Technically, the Dollar Currency Index is due to depreciate further to the channel marked by the yellow line (see image above). This depreciation will give a 78% retracement of the previous upwards move. If Clinton wins, we might see some appreciation but ultimately I see the market continuing with the technical move with a potential bounce at the 78.6 Fibonacci level. If Trump wins this election, I see the USA Index depreciating faster with a potential break of the upwards corrective channel. It will take more time for the Index Dollar to resume its technical movements. With both scenarios I will expect the EURUSD to continue appreciating – it will all depend on the results and how much instant volatility the market shows. Trump’s win will probably cause markets with higher volatility than Clinton as president.
EURUSD will be one of the many currencies that will be affected by the USA election, especially because the quote currency is the Dollar. This week, we don’t have any major fundamental news coming out the Euro zone which will make the Euro currency less volatile in the news. Moreover, there will be more technical moves occurring across the Euro currencies with the exception of the EURUSD.
When looking at the EURUSD currency pair I can see two probable resistance points which I have marked with the green and yellow diagonal single line trend line. The EURUSD might end up respecting either resistance, making it very difficult to trade, however, the green diagonal resistance will be the most likely resistance the market will respect, due to the downward channel.
Trade idea: It will be a tough start to the week for retail traders to trade some of the currencies, especially the EURUSD. I would suggest that any traders planning to trade whilst the results are coming out have a bigger stop loss than usual, as traders need to take into consideration the sudden spikes of volatility in the market. My position for the EURUSD will be to buy this pair having a take profit to start with at around 1.250 price area. Due to the high volatility, this pair might make it to the 1.300 price area although it might retrace quite quickly too. Remember that during this time of volatility, most brokers will increase the spread which might end up being taken out of trades, with either less profit or being stopped out without even seeing the price reaching the prefix stop loss.
By Elkana Roveglia – www.TakeMyTrades.com