Traders now anticipate further gains in Bitcoin over the coming days and weeks as the market adapts to a new U.S. government environment. Bitcoin peaked around 76,500 yesterday but has since retreated to 75,000 in today’s trading on some profit-taking. Generally, however, traders are looking for opportunities to buy in the current environment. Initial support is expected at the previous resistance level and prior all-time high of 73,800, with further support around 63,000, where the 200-Day Moving Average is positioned. Since Bitcoin has broken to new highs, experienced traders are likely to consider Fibonacci projections for the next move, with the first resistance level at 87,600 based on the Q4 2022 low to the recent high. Given the recent volatility, along with the potential unpredictability of the new President, traders are also prepared for some sharp price swings as we move forward.

Key Levels:

• Resistance 2: 87,619 – 23.6% Fibonacci Projection
• Resistance 1: 76,499 – Record High
• Support 1: 73,800 – Previous Record High
• Support 2: 63,556 – 200-Day Moving Average

The post Trade Bitcoin on the US Election Result first appeared on IC Markets | Official Blog.

Currency Trades
The dollar, in general, should rally further in the days and weeks ahead as the FX world prices in more inflationary conditions in the US. However, there are some clear pairs that many traders will be looking at:

• USD/CNH: Trump has not been quiet about his plans to impose substantial tariffs on China, and there should be potential for most topside gains in this pair as the next few sessions unfold.
• USD/MXN: Mexico is also in Trump’s sights, and traders are expecting to see further downside for the MXN against the dollar and on the crosses.
• EUR/USD: The Euro could take a lot more pain for a few reasons. Not only will tariffs hit European goods coming into the US, but as the world’s most traded currency pair, it is vulnerable to more volume hitting it as a reflection of dollar strength.

Stocks
US Indices:
They have reacted well in the initial aftermath of the Republican victory, with surging moves—especially for financials, which should benefit from looser regulation. However, there is some concern that tech stocks, particularly those linked with China, could be in for tough times ahead.

Global Indices:
As with US stocks, it looks like being a case of picking and choosing strong sectors for the months ahead as Trump’s policies are implemented and their impact is felt. Clearly, Chinese and European bourses may struggle if tariffs are as hard as the President has promised.

Cryptocurrencies
Trump has been a strong advocate of cryptocurrencies, and they have surged since the result came through yesterday, with Bitcoin driving to new record highs. Investors are expecting crypto to remain in vogue both as currencies and from a stock perspective moving forward, and will be paying close attention to plans from the new government.

The post Trump Victory to Reverberate Around Markets first appeared on IC Markets | Official Blog.

The Euro has traded in relatively good ranges in line with dollar sentiment over the last few weeks. It appreciated at the start of October alongside a weaker dollar and an anticipated more dovish Fed but has since dropped due to a stronger greenback and inflationary concerns associated with the election and a possible Trump victory. Traders will likely sell the Euro on any signs of a Trump win and buy it if the Democrats appear to be gaining control. Short-term support now sits at recent highs on the hourly chart, with additional support about 40 pips lower; both levels are expected to break in the coming sessions. The longer-term support level is near the month’s lows and appears to be at greater risk, but traders will aim to remain nimble and flexible as they capitalize on any updates moving forward.

Resistance 2: 1.1163 – Trendline Resistance
Resistance 1: 1.0914 – Trendline Resistance and November High
Support 1: 1.0837 – 200-Day Moving Average
Support 2: 1.0780 – Trendline Support

The post Trade the Euro on the US Elections first appeared on IC Markets | Official Blog.

The Dollar Index (DXY) has experienced a volatile session, with notable gaps at the open, and traders expect these conditions to become even more pronounced as the results session approaches, scheduled for the Asian time zone on Wednesday. In general, the dollar is likely to find support on dips regardless of which party gains the upper hand. However, in the short term, the market may pressure the dollar if Democrats take the lead, while a Republican resurgence would likely drive buying interest.

The DXY opened today at 103.95, having closed slightly above the 104.30 level following news that Kamala Harris had taken the lead in the polls over the weekend. However, betting markets still show Trump as the favorite, making the race exceptionally close. The DXY offers traders an effective way to hedge election-related exposure as the market continues to fluctuate significantly. Short-term support lies near today’s low around 103.60, with longer-term support around 100.50, while resistance is seen at Friday’s close, followed by October’s highs.

Resistance Levels:

• Resistance 2: 104.63 – October High
• Resistance 1: 104.32 – Friday Close

Support Levels:

• Support 1: 103.60 – Daily Low
• Support 2: 100.50 – Trendline Support

The post Trade the DXY on the ‘Trump Trade’ first appeared on IC Markets | Official Blog.

Adding a significant twist to this week’s update is the upcoming U.S. election, which could overshadow the impact of key data as investors shift their focus to next week’s results. Currently, markets are pricing in a 62% chance of a Trump victory. Should this forecast prove accurate, especially with control of both the Senate and the House of Representatives, we could see further dollar strength as Republican policies would face fewer hurdles. Conversely, if Kamala Harris gains momentum in the polls, expect the dollar to retreat somewhat, though Democratic policies could also introduce inflationary pressures into the U.S. economy over the long term.

Cable has been trading in alignment with the dollar’s performance in recent sessions and sits attractively on the daily charts for traders looking to capitalize on potential dollar moves from both Non-Farm data and longer-term election outcomes. Recently, it has retreated from annual highs in line with a stronger dollar and now rests on strong, long-term support levels. Stronger U.S. job numbers combined with a Trump victory could see the pair break through these levels, pushing it toward annual lows in short order. Conversely, weaker job numbers and/or a Democratic victory could lead to dollar selling, allowing Cable to rally back into recent ranges and potentially push toward the annual high. Many possible scenarios lie ahead, and if key events align, we could see the beginning of fresh trends for longer-term movements.

Resistance 2: 1.3434 – 2024 High

Resistance 1: 1.3396 – Trendline Resistance

Support 1: 1.2904 – October Low

Support 2: 1.2807 – 200 Day Moving Average

The post Trade Cable on Non-Farms and the US Election first appeared on IC Markets | Official Blog.

The prevailing sentiment is that a Trump victory, especially if he sweeps the White House, Senate, and House of Representatives, would be negative for stock markets overall. Although some sectors may benefit, it could lead to significant corrections across indices, with the Nasdaq likely to be most affected, particularly if Trump enacts the tariffs he has proposed. His administration would also represent more inflationary conditions, potentially pressuring the Federal Reserve to maintain or raise interest rates, which is generally seen as negative for stocks.

A Democratic victory for Kamala Harris is perceived as less disruptive to the markets, partly because her party currently holds office. While her policies are also seen as inflationary, they are not viewed as having as severe a negative impact on the overall market. This scenario could present the best opportunity for the current bull run to continue post-election.

A split outcome, with different parties controlling the White House, Senate, and House of Representatives, could introduce more market uncertainty. Although this would likely be seen as a negative, it could also mean difficulty in implementing either candidate’s policies, possibly resulting in the continuation of current conditions. Regardless of the outcome, increased volatility appears to be the most likely scenario.

Resistance Levels:

• Resistance 2: 20,690.96 – All-Time High
• Resistance 1: 20,469.11 – Trendline Resistance

Support Levels:

• Support 1: 18,696.00 – 200-Day Moving Average
• Support 2: 18,426.88 – Trendline Support

The post Trade the Nasdaq on U.S. Election Volatility first appeared on IC Markets | Official Blog.

The DXY surged by over 8% in the 40 days following Trump’s 2016 presidential victory. While current circumstances differ, traders are not ruling out a similar movement this time around.

Recently, the DXY rebounded off the key 100.00 level, bolstered by changes in market fundamentals, and is now positioned just below the 200-day moving average. Should a strong Trump victory appear likely in the coming weeks, this particular ‘Trump Trade’ could gain further momentum.

Resistance 2: 104.63 – Trendline Resistance

Resistance 1: 103.80 – 200 Day Moving Average

Support 1: 100.41 – Trendline Support

Support 2: 100.16 – September Low

The post Trade the DXY on the US Election first appeared on IC Markets | Official Blog.

Here’s a breakdown of factors to consider when deciding whether to trade in the days and weeks leading up to an election:

US elections introduce significant volatility to the markets, particularly in stocks, foreign exchange, and commodities. Prices can fluctuate dramatically due to speculation, polls, and policy expectations. While this volatility creates profit opportunities, it also brings the risk of rapid losses.

• Opportunity: Election-related market volatility can present trading opportunities. For example, sectors that resonate with the winning candidate’s policies may see positive movements. If Trump were to be re-elected, traditional energy, defense, and certain technology stocks might benefit, whereas a victory for Harris could favor renewable energy stocks, infrastructure projects, and the healthcare industry.
• Risk: Market volatility can stem from uncertainty regarding upcoming policies and regulations. A lack of political consensus might impede vital legislation and reforms while escalating instability or unrest could disrupt business activities and undermine investor trust. Moreover, the reactions of different industries may vary depending on election outcomes, influencing the broader stability of the market.

1. Impact on Different Asset Classes

Various asset classes react differently to elections, making it important to understand how your trades will be impacted.

• Stock Market: The stock market is usually volatile before elections, particularly in sectors sensitive to potential regulatory or policy changes, such as healthcare, energy, and technology. Uncertainty about taxes, government spending, and regulation can cause investors to move in and out of stocks. Historically, the stock market has shown a tendency to rally post-election as uncertainty fades.
• Forex Market: The foreign exchange market can be extremely sensitive to the outcome of US elections, with the US dollar usually seeing volatility. Depending on which party is expected to win and what their policies suggest for economic growth and trade, currencies may experience significant swings.
• Commodities: Safe-haven assets like gold often rise before elections due to heightened uncertainty. If market participants are worried about the election outcome or policy shifts, they may rush to buy gold, causing its price to spike. Oil prices may also fluctuate, particularly if energy policy is a key issue in the campaign.

2. Strategy: How to Trade Before the Election

If you decide to trade before the election, it’s crucial to have a strategy in place to manage the increased volatility and potential risk. Here are some approaches you can consider:

• Reduce Position Sizes: Given the market’s unpredictability during an election, one way to reduce risk is to trade smaller position sizes. This limits your exposure to large market swings and helps preserve capital in case the market moves against your trade.
• Use Stop-Loss Orders: Implementing stop-loss orders can help protect your trades from excessive losses if the market experiences sharp, unexpected moves. Set stop-loss orders at levels that account for increased volatility but still protect your downside.
• Stay Informed: Monitor news, polls, and economic data closely. Stay aware of important election events, such as debates and announcements, which could shift market sentiment. Use this information to adjust your trading strategy in real time.

The post Should you trade before the US election? first appeared on IC Markets | Official Blog.

Why Gold Prices Spike During Elections

1. Political Uncertainty

Elections, especially in large economies like the United States, create an environment of uncertainty. Investors don’t know which policies will be enacted, how trade relations may shift, or what economic reforms may be introduced. This uncertainty drives investors toward safe-haven assets like gold, which is traditionally seen as a store of value in times of volatility.

For instance, a government with policies that favor fiscal stimulus or increased spending may stoke inflation fears, pushing investors to seek out gold as a hedge against inflation. Conversely, a more conservative government that tightens fiscal policy may still cause market turbulence, driving demand for gold.

2. Market Volatility

Elections are often accompanied by increased market volatility as investors react to poll results, debates, and potential policy announcements. Stock markets may fluctuate wildly in the days leading up to and immediately after the election, depending on who is perceived to be leading and how markets anticipate future policies.

During these periods of volatility, gold is typically seen as a more stable investment. Investors sell off riskier assets like stocks and move into gold to preserve their capital. This increased demand pushes gold prices higher, particularly when markets are uncertain about the election outcome.

3. Currency Fluctuations

Elections can also cause fluctuations in a country’s currency value, especially if the political landscape suggests significant economic policy shifts. If the currency weakens due to election uncertainty, the price of gold often rises in that currency. For instance, if the US dollar weakens following a US election, gold becomes more expensive in dollar terms, driving up demand.

Since gold is typically priced in US dollars, any depreciation in the dollar can also lead to a global increase in gold prices, as it becomes cheaper for international buyers to purchase.

How to Trade Gold During Elections

Gold’s behavior around elections presents traders with various opportunities, but it also requires careful planning and strategy. Here are some key ways to trade gold effectively during election periods:

Spot Gold Trading

Spot gold refers to the price at which gold is currently traded for immediate delivery. Many traders use spot gold to directly capitalize on short-term price fluctuations during elections. If you expect market volatility or uncertainty to drive gold prices up, you can buy gold in the spot market, aiming to sell it later at a higher price when demand peaks.

However, you’ll need to monitor key election events—debates, polls, and policy announcements—that could shift market sentiment and cause price swings.

Risks to Consider

While trading gold during elections can be profitable, there are also risks to keep in mind:

• Reversals Post-Election: After the election is decided, uncertainty may dissipate, causing gold prices to drop as investors move back into riskier assets like stocks. Timing your exit is just as important as timing your entry.
• Unexpected Outcomes: Elections can be unpredictable. Polls may not always accurately reflect the eventual outcome, and markets could move in ways that contradict expectations.

The post Why Gold Prices spike during elections and how to trade it first appeared on IC Markets | Official Blog.