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US PRESIDENTIAL ELECTION - 02/11/2020

Micro Analysis

02 November, 2020

For General Information only. Not Intended to Provide Trading or Investment Advice. Your Capital is at Risk.

US PRESIDENTIAL ELECTION (November 8, 2016)

  • US Presidential Elections have been always an attractive event, taking place once in four years, increasing market volatility after first results are reported.
  • Back in 2016, to many considered underdog in the presidential race facing off Democrat Hillary Clinton, Donald Trump managed to pull off one of the greatest upsets in the US history (Donald Trump was given only 29% chance to win the election a day before election). He managed to win his first presidential term to shake up the financial markets immediately. The 2016 election took place on November 8, and already on November 9 the world had some election results, pointing to Trump winning his first term.
  • The markets rose in volatility, briefly sending Gold and Silver prices up by 5.42% and 3.93% respectively. The US stock markets fell with the tech heavy USA100 index losing 5.78% very quickly. The first results sent the US dollar tumbling, with the EUR/USD rising as much as 3.60%.

Table (I): Price Volatility After First Presidential Election Results Were Reported on November 9, 2016

November 9, 2016

Instrument

High

Low

Price Change

Direction

Percentage Price Change

Gold

$1,337.17

$1,268.44

$68.73

UP

5.42%

Silver

$18.98

$18.26

$0.72

UP

3.93%

EUR/USD

1.12982

1.09057

0.03925

UP

3.60%

USA100

4836.63

4556.88

279.75

DOWN

-5.78%

*- EUR/USD Price Change Expressed in Dollar Pips

Data Source: Fortrade MetaTrader 4

US PRESIDENTIAL ELECTION (November 3, 2020)

  • This year will be no exception as Donald Trump runs for a second term. Donald Trump is well known to the financial markets as throughout the first term his comments and sometimes his unusual actions and decisions would increase market volatility suddenly.
  • Donald Trump finds himself in a similar situation as in 2016. Donald Trump is behind Democrat Joseph Biden in the polls, given around 10% chance to win the presidential election on November 3, 2020.
  • MAJOR FEAR: Fears over contested election (no clear winner) have risen recently, which could increase uncertainties this year to also drive the market volatility very high. Analysts believe that the most important swing state is Florida, which sees Donald Trump and Joseph Biden close in the polls. The major fear is that on November 4 there will be still no new President in the US.
  • EXPECTED VOLATILITY: Volatility is expected to increase after some results get announced early on November 4. The table below presents support and resistance levels based on Presidential election 2016.

Table (II): Support and Resistance Levels Based On Presidential Election 2016 Caused Volatility

Instrument

Support 3

Support 2

Support 1

Resistance 1

Resistance 2

Resistance 3

Gold

$1,793.80

$1,825.07

$1,891.02

$1,925.15

$1,959.31

$1,993.46

Silver

$23.11

$23.41

$23.71

$24.33

$24.65

$24.96

EUR/USD

1.12340

1.13656

1.15003

1.17779

1.19175

1.20572

USA100

10529.00

10724.47

10927.32

11352.96

11567.93

11781.78

Please note that past performance does not guarantee future results.

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