US traders are looking and following odds to get some directionality from the markets. It´s really hard to say who is going to win this election but whoever does it will move the markets BIG time. We´re expecting 2.5%+ moves in either direction by the end of the day, meaning that we are gonig to be monitoring (not so much trading) the markets all throguh late Asian trade tomorrow.
With the news that Hillary Clinton was cleared by the FBI after the latest email review global futures opened with a huge gap to the up side and the global rally continued until today.
We expect a higly volatile and choppy trade today with every poll bringing players to the marke. Either buying US Dollars and Equities on a positive Clinton poll or selling US Dollars and Equities on a positive Trump poll. Either way caution is advised.
One of the most important polls we are going to be looking at is Florida´s because of its importance as swing State with 29 electoral votes.
Now to the Currency markets.
With Brexit still weighing on the Pound and the Clinton week-end gap/global rally underway (also with better odds of winning the election, quote Reuters with 90% chance) the GBP/USD is the currecy pair we have our eyes on. Last week the Pound went on a rally on news that Article 50 could only be triggered by Parliamentary vote and it hit some very strong key levels at the 76.4% and 261.8 Extension. This move completed a bearish butterfly with a reversal zone around 1.2540. After the gap up on the US DOllar making the GBP/USD to gap down the Clinton global rally triggered our shorts when it broke with the 1.2430 zone.
Our first targets are at the previous structure high / 50% of the entire rally to the 261.8 extensionwhich is also the short term bull-bear zone for us. Here we expect to find buyers but again, because of the US elections this levels can easily break or not get hit at all. UK´s manufacturing data is in less than 3 hours and this shuold give us some sens of direction since the pound has been static under 1.2400 for the entire APAC session.
A clinton win could see the GBP/USD move under the long term bull-bear zone breaking the previous weekly low and a Trump win could see this pair hitting post Brexit lows on an unclosed gap at around 1.3400
As we said before technicals are bearish, global rally and markets are position for a Clinton win but volatility will be difficult to trade. Small positions and big stops might do the trick.
Good luck and happy trading.
