All posts

FOREX Chart Of The Day: Vaccine Headlines Ignites Risk On Move


According to news from pharmaceutical company PFIZER it’s potential vaccine is more than 90% effective against COVID-19.

The market reacted to this with stocks indexes rallying significantly.

Watch the video to learn more…

Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.

Practice trading with a demo account
In this video, we’re going to talk about the headline that has seen the market move into a risk-on sentiment. So there’s been news of a vaccine, and that has absolutely exploded the market into a risk-on situation. We’ve seen the likes of the stock markets and the Dow Jones–have pointed out here– rally into the upside. Now, this move may be faded, so we’ll take a little bit of a look at this. But, essentially, this risk-on sentiment that we’re seeing at the moment could be here to stay. If the news of a vaccine proves to continue, we’ll see that risk-on. So, we’re expecting stocks to potentially continue to rally off the backs of this. Stock markets like the Dow and the S & P should really benefit from this – not so much the NASDAQ because the NASDAQ is full of tech companies. Tech companies may be getting hit by this news. So, you have Amazon, Zoom, for instance, which will be impacted by this headline. But this has also seen our analysis from the Forex Market Outlook being a bit overshadowed.

Now we weren’t expecting any news like this, which has caused gold to drop as well. We were speaking about gold potentially finding some support around about 1930 – That is out the window now. It just shows you how the markets react to this coronavirus data.

So, we were looking at the potential for the market to retest this area, here, at about 1925-1930, and look to react from that point of view.

Whereas the prices dropped further now, this has moved more than the actual election news, and could potentially play out our original analysis. On the election, we talked about gold heading towards the 1780s, even the 1750s in order to look for that longer-term long opportunity. It looks to me now that there’s a lot of pressure on gold. We’re seeing risk-on., gold would be put under pressure for whatever reason and we’re starting to see that move to the downside.

So we’re really looking for the potential for the stocks. Now Stock markets started to see a little bit of a rebound from the initial move that we saw. There’s a bit of recovery – whether that be profit-taking or a fade of the actual news move, through there. But, there could be a couple of different options to watch and I think stocks could potentially continue to rally.

Now, if I put this trend line through here, take a look at the level of support through, there, and I also want to take a look at the RSI indicator through, here. So, it looks to me like we’ve got a little bit of a way to go. But essentially, what we have here is: the market is heading back to those all-time highs at the moment, rejecting that all-time high area.

Now, what I was looking at earlier was whether if the price was going to continue to rally and remain above, where could it potentially head towards, and the potential of the market to top out around this area. Because if I took the RSI support and resistance into consideration, I have the two highs that I’ve joined on price, and it looks to me like we could see an upside into this zone, where the price is at the moment. But, I’m expecting the price to head towards that trend line, which is around 30400 – this is something that I’d be looking for at this point in time. So, we could see the price end up in this area before seeing a rejection of that. And we could be still seeing that move up tomorrow, if the headline remains so.

Now obviously, we’re just about half an hour into the US trading at the moment.

Biden is expected to talk on this matter later today. If that is upheld by Biden, we could see this risk-on to continue.

Now, Aussie and Kiwi were topics on potential strength for us last week. So Aussie, to me, was a strong market. I was looking for this potential to continue going into this week, and this news will only benefit the likes of the AU Dollar, even CAD and Kiwi will only benefit from this.

We have to be a little bit careful because, it’s Monday as well. We’re starting to see the US come in – we’re starting to see a bit of a dip back in this move at the moment, which could lead to a few false breakouts because we are approaching key-levels of support and resistance. You can see that here on NZD/USD, in particular.

We have broken through the recent highs, but we haven’t formed a confirmed high on the RSI yet, which is suggesting to me that either we could still see some downside or we need to wait for that confirmed high to look for those long positions. But, the market is reacting to this risk-on at the moment.

JP Yen is absolutely smashed at the moment and this could be something that we look into. Again, we look at targeting that 104 last week with longs at 104 and potential with stops at 102. Now, this is what that trade would have looked like if we were filled through the election. Obviously, the volatility of the election didn’t drag us into that trade. But the market is bouncing nicely here – against some breakouts on the RSI, as well. JP Yen’s looking very weak on this news and it looks to be continuing to the upside.

So, naturally speaking, we’ve looked at Kiwi, we looked at Aussies thinking that these are going to continue, and JP Yen’s getting weaker.

AUD/JPY could be something that we look at for potential short-term long opportunities and the price breaking down.

You can see we broke out of this RSI support on the 3rd of November, and that market has been rallying ever since we took out this trend line resistance as well. The price is really pushing to the upside. Looks to me like this could continue as well, we just need to see how these headlines really play out.

We don’t want a “Turnaround Tuesday”, as they call it, where the price continues and pullback. But the risk here, for me, is still looking to the upside. I think we’re going to see some potential if these headlines remain and if the market prices in the fact that vaccine is something of huge importance, which obviously, it is. If the market holds above 76.50, I think we’re going to be looking good for some long opportunities still on AUD/JPY, so we’ll keep an eye on that.

But just to give you an update on the reaction to this vaccine news, we could be seeing some more risk-on in the market and some further stock markets increasing. Look for your risk currencies to get stronger and the potential for oil to break out as well.

So we’ll keep an eye on these, and we’ll keep you up to date. Thanks for watching. Speak to you soon.

We hope our forex chart of the day analysis helps you in your trades. Practice trading with free $50,000 funding when you sign up for a free demo account at Blueberry Markets.

Blueberry Markets is not a financial adviser, and does not issue advice, recommendations, or opinion in relation to acquiring, holding or disposing of a margined transaction. We provide general advice only and accordingly you should consider how appropriate the advice (if any) is to your objectives, financial situation and needs before acting on the advice.