Trump Tests COVID-19 Positive — How Will The Markets Respond?
Within hours of the announcement of the U.S. President — Donald Trump, and the first lady — Melania Trump, testing positive for Covid-19, crude oil and stocks have shown a notable decline. This decline seems to mimic the market conditions that were last observed in March.
In the month of March, markets witnessed a steep slide in precious metals, followed by a vigorous rebound. In the current scenario, we expect history to repeat itself. As far as price action is concerned, it’s in alignment with the news mentioned above and the technical indications that we had seen previously.
Last week, the USD Index was just beginning to break above the declining resistance line. The situation doesn’t become bullish unless there is a confirmation of the breakout in the form of either a notable move above the resistance, or three consecutive daily closes above it.
As it turns out, that’s precisely what we’ve witnessed this week. The USDX moved slightly lower, while gold, silver, and mining stocks moved marginally higher. And then we observed a pause in all of them. However, the magnitude of these moves were not particularly significant.
Just as the USD Index seemed to come to a hault, the exact similar happened with gold, silver, and mining stocks. Gold moved a bit above its very recent highs yesterday, but the move was insignificant. The same happened when it came to the mining stocks. Silver didn’t manage to move above its very short-term highs. All in all, after a considerable short-term decline, the markets took a breather, seemingly ready to move lower once again.
-When will this correction end?
At the moment, it’s relatively unclear.
The short-term triangle-vertex-based reversals were quite essential in timing the final moments of the given short-term moves in the past few weeks. It becomes imperative at this point to note that the early and late September lows developed when the support and resistance lines were crossed.
Based off of recent highs and lows, the support and resistance lines both crossed again. And indeed, gold is trading below yesterday’s closing price in today’s pre-market trading.
This approach might not always work precisely considering the politically volatile characteristics of the current month. But nonetheless, it seems as though this technique has worked in the past.
