Election Trade Setups Part 2

Election day is here. Of the potential trade setups from yesterday, the SPX500 blew through resistance with no sign of turning, and for that we are grateful, for that was the least promising of the four. CHFJPY reached resistance, but has thus far not provided an entry either.

EURUSD was more promising, and went 1:1 earlier today. Wily traders should have taken some profit and then leave it to see what happens next, just in case election jitters permit a sudden jump in this pair. It is worth noting that even if it is stopped out for breakeven at this point, we would still permit a second entry, provided yesterday’s Blue Box is still intact.

Finally, gold, in the form of XAUUSD, provided an entry similar to EURUSD, although it has not gone as far. The comments made for EURUSD apply to this pair also.

As we move into the final hours, it is worth scanning to see if there are any last minute setups. To hedge the positions that developed yesterday, we will look to go long on SPX500, should the opportunity allow. There is still some time remaining, and should it pull down to the potential Blue Box buy zone at 2120.35-2123.41, traders should monitor it carefully for entries, especially on the hourly chart.

Figure 1: SPX500’s Hourly Blue Box

Curiously, the UK is showing its influence indirectly, with the recent fiasco involving a court decision regarding Brexit. EURGBP is displaying a potential to wobble in the likely upcoming volatility, and if it does, there may well be an opportunity to short it from the hourly 0.8956-0.8987 Blue Box, as shown in Figure 2.

Figure 2: The Hourly Blue Box on EURGBP

The ideal situation would be if we are able to enter hedging trades to the ones yesterday whilst not being stopped out of either direction until the last possible moment. Whilst things may not be that simple, it is worth considering one other potential hedging candidate.

CADJPY has joined CHFJPY (our candidate from yesterday) in activating its four-hourly Blue Box, as shown in Figure 3.

Figure 3: Four-Hourly Blue Box on CADJPY

Should we see violent reversals, these are both candidates for trades. All the setup conditions have been fulfilled, except for entry triggers, which must be in accordance with each trader’s individual plan. The Blue Box on CADJPY is 78.41-78.63. These setups should collectively be sufficient trading fodder as the anticipated volatility begins.