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Tomorrow, on 8th November, the US presidential elections begin. Up until now, the dispute on the presidential race between Hillary Clinton and Donald Trump has been a fierce battle. The polls have been mostly in favor of Hillary, although Trump has been gaining terrain in the last 3 months. Three months ago, Hillary had an advantage, in average, of +8pts ahead of Trump in the polls, but mostly due to Clinton’s scandal with the confidential emails which involved an FBI investigation, Clinton now leads Trump by just 3 points. On some polls such as LA Times/USC Tracking, Trump is the leader (+5 pts), and in Gravis, Hillary and Trump are tied. So, everything is still possible, and if there’s one thing that Brexit taught us traders, was not to rush to conclusions too soon.

Clinton vs Trump Polls

What are the effects in the Forex markets?

This is a unique presidential race – Donald Trump is a man with many diverging ideas from the mainstream Republican ideology, such as on protectionism, foreign policy, and immigration policies, and so, the latest presidential races (such as George W. Bush election) aren’t a reliable indicator of what’s going to happen to the markets if the Republican candidate wins this one. Personal opinions aside, what everyone can agree on is that if Trump wins, he would bring quite some changes and unpredictability, at least at the beginning, to US politics and economy. Unpredictability brings volatility, and that’s what we can expect on a Trump’s victory. US Dollar would fall sharply, due to an expectation of a capital flight out of US Dollars to safe-haven commodities and currencies, such as gold and the yen respectively.

Clinton, on the other hand, is a more predictable candidate, and the markets know what to expect from her presidency if she wins. US Dollar will be strengthened since the unpredictableness from the elections will be gone, and safe-haven currencies and commodities (Yen and gold), would weaken for the same reason. The movements are skewed, though – a Trump win would give rise to extreme movements, while Clinton’s victory would mean more moderate movements. The table below resumes these effects:

Clinton vs Trump – Effects in the markets

A way to approach these elections could be to bet for a Trump’s win, as his win would move the markets more sharply than Clinton’s win (and hence, would give a favorable risk to reward), but since his election probability is also lower due to the polls results, it would certainly be a very risky shot. The wisest thing to do is to stay out of these assets until the votes are counted, as a period of high volatility is to be expected during the voting day, and after the candidate is chosen.

I’m happy to announce that our newest indicator ‘Congestions’, is finally ready, and launched for Metatrader 4! This indicator is specialized in finding slow supply and demand patterns, that appear over a range of bars – these are the congestion bars.

Congestions Indicator

Based on the found congestion bars, after a market price confirmation, the indicator starts drawing a demand zone (for demand congestions), that extends into the future. These are zones where large traders are in control, since they represent the prices where they most recently bought the market heavily. Upon reaching these zones, price is expected to react by reversing quickly and/or show more demand, or if there is no significant reaction, a breakout can probably be traded.

Feel free to browse through the indicator’s page to find out more.

Full Package

We also released the ‘Full Package‘, which includes all the indicators in the website + templates with pre-configured alerts for each type of situation, and a guide on how to use this full package in trading.

Full Package in EURUSD H1

Try our Demo

These indicators are all available in the demo, so if you haven’t already, try them for free here!

Should you have any question, feel free to contact us.

Best regards,

Leonardo B.

Dynamic trend: Down

Background: W1 – weak; D1 – neutral

Phase: Distribution

In point 1 there was Buying Climax on high volume. The next bar was a down bar, which showed selling by the smart money.

In point 2 there was an Up- thrust. If the spread is narrow (as in this case), then the value of this signal is not great, but taking into account the weakness in the point 1 and the previous up-bar with a large volume and a narrow spread, it informs us that the supply has probably overcome demand.

In point 3 there was a top reversal bar. Maximum of the down-bar above the high of the up-bar, but the volume lower, indicating weakness.

In point 4 more reversal bars, with VSA signaling supply.

Selling on the distribution phase is risky, since the market doesn’t have any clear direction and is prone to shake-outs of the highs.

Suggested Strategies

Consider selling using a sell-stop order when «No Demand» bar appears (riskier). Or a sell-stop order when the price breaks down 1.1130 and «No Demand» bar will appear (less risky).

Since Brexit, gold, silver, and related currencies (comdolls) such as AUD, have been on the rise, due to gold’s status as a safe-haven commodity. Since a few days back however, things have started to change, and big sell orders have started hitting those markets.

Gold

In H1, VSA showed a Major Supply signal, which knocked off the market into a sideways range. A few more supply signals have been showing since then. The prices formation, together with the volumes, form a congestion zone, which is the red rectangle (from the soon-to-be-released indicator).  These are zones where the price usually stales, and this is a good example. A breakout of the congestion zone to either side will give more indications of what’s to come. I’m more inclined to take a short if the up trendline breaks, as any upside breakout will most likely be short-lived.

Silver

Silver has already topped, also on Major Supply, and as of now, the prices have went down a bit too far to go short. In this commodity, more supply or low volume up bars above $20.15 will give another opportunity to go short.

AUD/USD

While gold and silver prices were stalling, this pair led the way, and made a serious downturn. It’s now getting near the long-term up trendline, which may provide some short-term support. In this chart it’s also important to note the congestion zone, due to the shake-out a few bars before the start of the rectangle. These are zones where there were previous big buyers in the market, and unless they have sold their positions in the meantime, they will keep buying and support the prices.