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Price Action Setups Around the U.S. Presidential Election

Price Action Setups Around the U.S. Presidential Election

2016-11-08 19:25:00
James Stanley, Currency Strategist
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Price Action Setups Around the U.S. Presidential Election

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- In this webinar, we used price action to look at macro markets ahead of the results for today’s U.S. Presidental elections. The election tonight can elicit lower levels of liquidity and increased volatility, so much of what we discussed was based upon reacting to the potential reactions around price action tonight; rather than attempting to predict what may happen.

For more information, please check out our market talk article from earlier today entitled, Price Action Setups Ahead of the U.S. Presidential Election.

- Given recent price action in USD, Gold and the S&P 500; we can deduce that the near-term reaction would likely be one of USD and Stocks weakness (and Gold strength) in the event of a Trump scenario with the exact opposite in terms of a Clinton scenario.

- As we noted with the Brexit referendum: In a Trump scenario, the down-side in the S&P may be abbreviated as this election does nothing to change the role of the backing Central Bank (Federal Reserve). With Brexit, a lot of fear drove prices lower but within a couple of trading days, support had returned and higher prices came-in as the Bank of England implied even more monetary support.

- Of specific interest around tonight’s election will be price action in the U.S. Dollar. A big takeaway from last week was just how weak the Dollar got on rising odds of a Trump scenario. Again, the more critical driver here is the Fed, and the Fed has been persistently hawkish on the prospect of rate hikes in December. A Trump scenario upsets those odds as it introduces considerable uncertainty into the environment.

--- Written by James Stanley, Analyst for DailyFX.com

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