How Will the Bailout Effect USD And The Currency Markets?
That's the $700 billion questions isn't it?
The truth is both exciting and also quite frightening. We are witnessing an historic time in the world financial markets, not just in the US. The fact remains that the US economy is something equivalent to 25% of the world economic output. You can't have a situation like this happening in the US without severe affect on the rest of the world. The world has not witnessed anything like this since 1929. When your kids and grand-kids go to University they will be taught about this time in economics and politics as being one of the greatest events of the last 100 years.
It will be interesting to look back on this 20 or 30 years from now to see how this event changed the world of finance and I'm sure, politics as well. With the most historic US election happening at the same time, Hollywood script writers couldn't have imagined such a scenario! As a result, all markets have been going sideways for days now waiting on a final outcome on the 'Bailout' plan. What happens this weekend will shape the future for many years to come. What is important to remember is that most world economies trail the US by about 6 to 12 months (in normal times). With this kind of event this will surely be accelerated and the spill over effect will ripple quickly throughout the rest of the world.
Because all markets are moving sideways awaiting more news, it is very difficult to read waves and patterns. So what happens immediately after a resolution on the plan is difficult to project. If you are planning to trade as the market opens and a final plan is approved, be prepared for the possibility of EXTREMLY volatile moves.
Please be cautious and trade with very good money management. Keeping risk below 2% of your account is strongly recommended.
As a result, this week I will simply be pointing out what I perceive to be the most important barriers. Breaks and turns will likely happen at the defined levels. The challenge will be in the volatility as this may cause false actions.
Cheers and good trading.
