Every week, we look back at US President Donald Trump’s tweets — and see if there was a trading opportunity for you!
It’s a long (and sometimes crazy) job, but we love it!
This week, we take a look at a Trump tweet on the event that everyone was talking about: the US-Mexico-Canada-Agreement (USMCA).
Volatility: This tweet caused a momentary spike in the volatility, as measured by the average directional index (ADX). This was followed by the US Dollar making a really nice bullish recovery following a sustained period of bearishness.
Opportunity: Traders can make sure the USD’s sudden rise in value doesn’t hurt their trades. If you are trading on the weakness of the US Dollar, then immediately close your short-term positions whenever Donald Trump makes a tweet that has any positive connotations for America. A positive Trump tweet usually causes a small (albeit significant) rise in the strength of the US Dollar.
In the graph above, we can see how traders can take a short position when price breaks support and crosses below the Ichimoku Cloud (an indicator that sets out support and resistance and identifies trend directions). As the price trends downwards, traders can close out their trade early — instead of waiting for the price to hit their profit target — as soon as they see Trump announce some positive news for the US economy.