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.
This video is one more of the series of videos about VSA, and shows the general setup on how to trade with supports/resistances and VSA, with the integrated alerts in the software. It’s posted in Youtube, if you wish you can subscribe to our channel to get notified of new videos.
We’re proud to announce our partnership with NinjaTrader, which means all of the trading tools we have will soon be available for NinjaTrader 7!
So, for those who don’t know, what is NinjaTrader exactly? It’s a multi-asset platform, a free one, where you can check the charts, and trade various types of assets, from stocks, to Forex and futures. For Forex and futures, the live data is free when registering by certain brokers/data providers, such as FXCM. For stocks, end-of-day data is free for the stocks of US major indices.
NinjaTrader also brings an easy automatic strategy builder, where you can construct a robot using indicators and trade management rules, and to backtest it, without having to do any coding. While offering these features, the platform still maintains its user-friendliness and intuitiveness.
We think this is a very broad and powerful trading platform, and definitely worth a try if any of the features interest you. From our part, once we have the tools available, we’ll be using it regularly, including in the blog posts. Due to the broader asset offer, we’ll also expand on the assets that we cover here in the blog, and the strategies used.
Pivots and Dynamic Trend
You can download, for free, our first indicators for NinjaTrader, Pivots and Dynamic Trend, through this page:
» Download Complementary Indicators
Dynamic Trend in NinjaTrader
Soon we will release other tools for this platform, new educational content, and a brand new indicator is coming for Metatrader, so make sure to check regularly! And as always, if you have any questions, feel free to contact us.
The trading guide on our website for VSA was just updated with new images, following the recent changes in the trading guide, after the 3.0 update on AT – Alert System. In each of the sections, you can now find the new charts explaining the concepts, showing successful and failed setups. Likewise, Alert System page was also updated.
Soon there will be new videos available, and an exciting new indicator, specialized in spotting important price zones. Stay tuned!
EURUSD M15 VSA Signal + Background
All the best,
Leonardo Barata
EURUSD, after a series of failed rallies, met by supply and lack of demand, is now breaking-through a down trendline.
- Here we saw significant supply which VSA marked as a purple dot, and afterwards more supply on the way down. Still on this correction, we saw a high volume bar making a significant higher high than the previous ones (3rd red arrow in the chart), though it closed on the lows. This was a fake-out rally that made many traders believe that EU would keep rising, but in the end it was met by heavy supply which made the volume spike, and closing on the lows.
- After a demand (blue signal), EURUSD attempted the 2nd rally, and while successful at first, during the Christmas time the lack of activity prevented prices from going upper and breaking a resistance. Supply afterwards (light blue dot) would mark the beginning of another general fall in prices.
- Right now, after a trendline breakout attempt, that was met by significant selling (probably from traders trying to catch the down move), it finally broke through in the recent hours. The volume isn’t that high though, and the supply signals before, while below the trendline, could be excessive supply. A rally would confirm the strength, a dip or the break of 1.105 being the trigger. If however there keeps being supply in the market even above the trendline, the prices may not hold much longer and we might see another bearish movement similar to the previous ones.
Our newest indicator Reversals was just released today. This is an indicator that recognizes patterns in price and volume action to determine price reversals accurately. These should be used within a trading system, either as entry or exit points, or as a confirmation of a trend reversal. It looks for different patterns than VSA does, so both can be complemented. The indicator also brings an adjustable sensitivity, changed directly in the chart, which allows to very easily adjust the indicator to the market and to your own trading method.
Reversals in EURUSD H1 with sensitivity = 8 (FxPro feed):
Reversals + VSA in EURUSD M15, as the price is bouncing on a support. VSA shows the background is still weak, though there has been accumulation recently at this level, shown by the green and blue dots/squares (Demand signals) before. Reversals on the other hand pointed out the reversals that VSA failed to, such as the last bounce off the support, as well as the most recent tops, as is normal with a high sensitivity (9). The most likely and strongest reversals are usually when VSA and Reversals both agree. If you’re already using VSA, check the blog regularly, where we will do posts that show how to combine these 2 indicators.
Click here to try a free demo on Reversals, and check Reversals page for more information.
Best regards,
Analytical Trader team
In this trade I want to point out a mistake which is better to avoid if you do not want losses.
What was right in this long trade:
- Strong signal (Minor Demand) before trend changed.
- Dynamic trend turned from red to green – this is the right sign for a long trade.
- Entry was made in a low volume down bar. This is basically o’k, only one thing – price moved quite far away after the trend changed.
What was wrong in this trade:
- There was only one missing thing – background was still weak. You do not have to go against the background, because even if other components are right for a long setup, it is most likely that this will not be a winning trade. If background is weak it means that imbalance between supply and demand is in favor of supply.
