Presidential Election day trading – Dollar index looses strength on weak selling volume.
During this Presidential Election day trading will see a lot of volatility as the underlying strength of the bonds market and the impotency of the Federal Reserve becomes more apparent. Remember the Federal Reserve is an un audited private banking cartel running the US money supply.
Here is the first area this week we shall see Presidential Election Day trading in effect: US Dollar index.
We shall see:
Euro Strengthen, Gold will take off, Silver will take off, Oil could strengthen, Bonds will continue selling off or will take a breather, S&P500 will challenge support at 2100 or dip below.
The critical support for the move down will be at 97.40, if buyers don’t defend here then the move will be to 96.38 on the 50MA.
Remember we are going into the election so I am expecting to see a bit of volatility, then consolidated price action.
The next major area of Presidential Election day trading we shall see volatility in is Gold and Silver.
The gold market spiked up this morning from the open as the dollar index plummeted in the overnight session. Gold has a firm support at the $1250 level with an upside target the 50MA at 1302. Gold tested under the 200MA and then reject prices under 1260.
Remember gold is very volatile and can have a large swing that is not relative to underlying dollar valuations. Gold is not a risk off trade in the market place. It is a catastrophe hedge. Institutional trading does not hedge with Gold because of this volatility and the leverage in the futures market. Institutional players like Banks, and some governments have been accused of open manipulation and few have paid fines because of it.
Upside targets 1302 then 1320-4.
The question is What will happen to gold when Hillary is voted in? We will see what the charts say as we are closer to the November 8 election date. So far it looks like business as usual with pull back in the markets (S&P500) and sell off in bonds and then strength in Gold because of the uncertainty of Trump getting in or not. The institutions are looking at this volatility and price adjustment as a way to leverage into new positions for the next run in either direction.
The stock markets will feel the pain of indecision and the misdirection during the Presidential Election drama.
The biggest victim will probably be swing traders and position traders in the stock markets. Watch for the S&P500 to break 2100 and then resurface on some type of news. Watching for a downside target of 2050 which is the weekly 50MA. Observe the previous swing down noted by the red arrow. This move was around the 70 point range, if we see the same volatility this week we could get to the 50MA easily. Sellers could move into this market quickly and gain control of direction. Money Maker Edge traders are selling the rallies until we see signs of turning around. If you are not familiar with volatile markets it is best to stay out.
The markets are one of the biggest “Fear Factors” for swaying public opinion as the public sees them as the bellwether of the economy. Unfortunately, with the Fed’s use of Dark pools (which can not be proven because they are un-audited) we will see our markets being bought at key levels as volatility ensues.
Remember, we have a December Fed meeting where there is also a possibility of interest rates being pushed up a quarter of one percent. So, the picture is for quite a bit of volatility.
Gold trading update – October 14 End of trading day.
This week gold stayed in a consolidated range at the bottom of a sell off which occurred last week. This happened to co inside with the Chinese holiday and therefore all the Gold bugs starting screaming conspiracy! But, as real traders we know that there are tells in the market when they are given that we can follow. In the Money Maker Edge system we look for commitment in direction of the market. The market clearly gave us the signal before the fall that buyers were loosing strength and sellers could take the direction away.
We have three lower highs with decreasing volume. There is no commitment to take this higher and each swing is shallower on less volume. Once price breaks through the support at$1310 you can see sellers piling on and a very volatile sell into the next support at $1266 support. The consolidation zone around here in light blue is where buyers and sellers have been trapped. The $18 consolidation zone has given no tell as to which direction to watch for the break out.
Gold Trading – Buyers in Control
If buyers move in off this support I am watching for this to return to the 1286-1300 area. It could be a choppy start to this move before we see any commitment. Don’t risk too much for this move, buy when you see commitment and continue in the direction of the trend.
Gold Trading – Sellers in Control
If Gold sellers move in and take this through the support the next area of support is 1230, then 1210 and then 1180 as an equidistant move from the previous sell off. You will notice that the volume is quite consistent in this area with no one taking the lead.
Gold Trading – Consolidation a warning.
When gold is in a consolidated pattern like the blue zone, watch out for traders to lure the novices in by using a head fake to get the trader to enter at the breakout above resistance or below support. This could be a risky trade as the market might reverse and then blow through your stop in the opposite direction. For instance, breaking above the 200 Moving Average and then immediately reversing and coming back into the consolidation Zone taking out your stops.
Take note of the Red Arrow Resistant Trend line, this is where I am looking for this market to go if buyers do get control. It will also be the area where sellers could move in and the next consolidation zone could occur.
Gold markets sold off with a momentum pushing through to lower levels.
As mentioned earlier if price can’t break this lower high I was looking for a move down to 1256. Seems we are close. The resistant trend line held, the lower highs showed less commitment on buyers side and then the sellers challenged the 1311 support and broke through.
Gold markets can continue lower
There is strong support at the 1269-70 area, but watch tomorrow as dollar continues it’s upward battle. Seems people have really sensed the oncoming collapse in the Euro and the move to buy dollars is on again.
Gold next area of support is 200MA, then $1220.
We shall see tomorrow. Would wait for this to consolidate before going in on large positions. Some physical gold buyers will call this a buying opportunity, Watch and see. Trade what you see, and always manage your risk first. Wait until you see the gold markets turn, trying to pick the bottom is very risky.
Trading the Gold Markets can be very volatile, if you aren’t used to trading it, stay out. Don’t put your capital at risk.