October was surely an interesting month in the forex market. First and foremost, we saw a drama unfold in the UK as prime minister Boris Johnson battled with parliament over Brexit, with the Pound surging as a result. Additionally, we have seen the US stock market rise to new highs, despite trade wars and increasing recession fears.
With all this in mind, the question now is what November will bring for the markets. Read on to learn what we think might happen and what the forex trading opportunities in November are!
US Stocks reach new high
As usual we will start this month by taking a closer look at the US stock market, and the S&P 500 more specifically, as it is such an important proxy for all of the world’s financial markets.
As we have seen over the last month, the S&P has made nice gains from a swing low that reached its bottom around the 2,880 region, to the current levels above the 3,000 mark. As of this writing, the S&P has even hit a new all-time high above 3,030.
The interesting thing about the S&P right now is that this market has continued to make new highs despite all the bearish news that are being thrown around.
As most of you know, Brexit is looming right around the corner in Europe, the US is in the midst of a huge trade war with China, as well as minor trade conflicts in other regions around the world, recession fears are growing, and we have a US President who is publicly going after his own pick for Fed Governor on Twitter, repeatedly calling for him to lower interest rates in the US.
But as we can all see with our own eyes; the stock market just keeps grinding higher. And if there is one lesson we should learn as traders, it is to never argue with the market. Believing that you are smarter than the market can cost you a lot of money, and it has bankrupted many traders before you.
Gold remains stuck
As the stock market has been grinding higher, gold – which is often inversely correlated to stocks – has struggled to establish itself firmly above the $1,500 mark. As of this writing, the gold price is consolidating within a triangle pattern that it is soon set to break out of, either to the upside or the downside.
Another interesting level to watch for gold right now is the 100-day moving average (blue line in the chart), which is approaching the current price levels fast. If this line holds, we can consider it a sign of strength for the gold price. If it breaks, however, a further sell-off down to the support at the 1,410 to 1,420 level is likely.
Note here that when we talk about breaking through certain levels on daily charts like these, we mean that the daily candle should close below or above that level. Briefly trading below or above a level, and then retreating again, is not enough to qualify for a real break-out. Instead, those events are often referred to as “fake-outs” by traders.
US dollar/Aussie dollar
When it comes to the US dollar against the Aussie dollar, things have been remarkably stable lately.
In fact, as we have pointed out in previous market updates, this currency pair has been trading within a clearly defined channel for all of 2019 now, and there is still no sign of it breaking out anytime soon.
What’s interesting to note now, however, is that the USD/AUD is currently hovering around the 100-day moving average line. In the past, we have seen strong price reactions around this line, which could mean that we may have some more violent moves than usual in this pair to look forward to this time as well.
However, as long as this trading pair does not break the upper or lower boundary of this trading channel, any new high timeframe trades will have a rather bad risk:reward outlook.
For shorter-term traders, however, USD/AUD could still be interesting to trade inside of the channel, using the upper boundary as resistance and the lower boundary as support for the price.
Join our trading course to learn more!
If you are interested in learning more about support & resistance trading and other trading strategies like it, consider joining one of our forex trading workshops held around Australia this year.
Anyone, even beginners with no prior experience in trading, are welcome to our seminars to learn more about how you can make an extra income from the forex market on your own terms. We look forward to seeing you there.