Trump Bump Price Action Setups: Gold, Bitcoin, EUR/USD, SPX

US Dollar, EUR/USD, USD/JPY Talking Points:

• The US Dollar hit a fresh two-year high last week as EUR/USD broke down but, interestingly, USD/JPY held a lower-high.
• There’s some remaining headline flow for this week ahead of the U.S. holiday, with FOMC meeting minutes out a little later today and then Core PCE set for release tomorrow morning.
• Below I share some charts from the webinar, focusing on setups around the US Dollar such as gold, Bitcoin, EUR/USD and SPX.

US Dollar

The USD spiked up to a fresh two-year-high last week, finally finding some resistance at the 108.00 level in DXY. The currency gapped-down to start this week which went along with a gap-up in EUR/USD but, so far, bulls have defended the 106.50 level well. That’s the lower-portion of the FOMC-fueled gap that built in November of last year. This keeps bulls in order as we near the FOMC minutes release, and tomorrow’s Core PCE remains a big deal as I discussed in the early-portion of the webinar.

For levels in DXY: 106.50 is support and 106-106.13 is below that. If bulls lose the handle there, then deeper retracement scenarios could be entertained and that’ll likely come along with a EUR/USD test through the 1.0611 level. But, in that backdrop, USD/JPY with a test at or around 151.95 may be the optimal focal point.

For resistance in DXY, 107.50 has already held a couple of attempts, including the weekly open and last night’s gap-up.

US Dollar Four-Hour Price Chart

Gold

Gold was flying high for most of the year as the Fed remained dovish even with inflation showing signs of entrenchment. It’s suddenly started to pullback in Q4 and as I posited in the webinar, I think it’s because there’s a degree of competition in anti-fiat flows, namely in Bitcoin but that statement can be spanned across the crypto market. And given President Trump’s courting of the crypto crowd ahead of the election, that can make sense.

But, with that said, I’m not expecting the new administration to usher in an era of austerity as Trump can be considered a market-friendly force.

So, I retain a bullish fundamental bias on gold, and the big question now is whether the technical backdrop shows the same. There’s been a grasping of support at 2617-2621 so far this week but there’s also resistance just overhead from 2643-2650. If bulls can trade through that, then the door can open wider for recovery themes. But – if seller should resistance in that prior support zone, there’s greater pullback potential to 2600, 2575 and then 2550, and that’s the level that buyers would need to hold to keep the door open for bounce scenarios.

Gold Four-Hour Price Chart

Bitcoin

It’s interesting how gold held below the 2k level for three-and-a-half years as we came into 2024 trade. I went over that at-length in the webinar and when gold first traded at 2k, Bitcoin was working on getting back-above the 12k level. And then as gold ranged for the next few years even as the Fed leaned heavy into accommodation, Bitcoin went through a massive boom cycle. That cycle reversed around the time that the Fed started hiking rates and from the looks of that relationship, it really seems as though Bitcoin started to get a lot of the anti-fiat flows that would traditionally flow to gold.

That also seems to be what’s been showing so far in Q4 where Bitcoin has been in an aggressive rally while gold has been on its back foot. I looked at this in the wake of the election, when Bitcoin seemed like the big winner from the Trump win. At the time, BTC/USD was working on the 75k level. And it’s gained more than 30% after to make a run at the vaulted 100k level.

In spot BTC/USD, prices came within $200 of that 100k level and since then it’s been a continued pullback, even with the widely-broadcast purchase from Michael Saylor and Microstrategy. But it’s psychological levels that remain of interest here and we’ve seen that in-play since the election.

After resistance-turned-support at 75k, the 80k level was up next as resistance. After bulls grinded through that, it was the 90k level and that held the highs for a bit, allowing for a pullback – until 85k came in. And then it was the 95k level that was resistance.

But now with prices going the other way the big question is whether bulls find the same perceived value at or around 89,999 that they found just a week ago. And if they don’t, then it’s the same spot of 85k prior support that’s in the equation.

Spot Bitcoin Four-Hour

EUR/USD

The breakdown in EUR/USD has been fast and intense. While bulls have tried to show recovery since last week’s breakdown, leading to some higher-lows, bears have also remained incredibly active, holding resistance at prior support around the 1.0550 zone.

This is an area where I’d be cautious of looking for USD-weakness, even for short-term pullbacks, and there may be a more attractive venue for such in USD/JPY. But in EUR/USD the big question now is whether bears taking profit can lead to a lower-high resistance test at 1.0600/1.0611, which was the resistance looked at in last week’s webinar that held the highs before the breakdown move showed.

EUR/USD Four-Hour Chart

SPX, S&P 500

Sticking with post-election themes, like I said in the aftermath of the election with USD running higher along with both stocks and US rates, it was my expectation that stocks would show as the winner. I retain that bullish bias a few weeks later and at this point, SPX is continuing to work on the 6k psychological level.

I looked into the matter yesterday, sharing a short-term gap from the weekly open, and once that filled bulls pushed for another higher-high which has continued to play through today. And if you’d like to see my big-picture view on equities, I authored the Q4 Forecast which is available from the link below:

SPX Four-Hour Chart

Longer-term, however, there remains a large gap from the election that I’d like to see filled by the end of the year. It’s a wide gap, and likely if that fills quickly, headlines will abound with bearish proclamations. But that’s the type of thing that can then set the stage for a ‘Santa rally’ to develop into the end of the year. Because, again, I’m not expecting any angling towards austerity from the incoming Trump administration, nor the Federal Reserve. But there’s clearly been hesitation from bulls at the 6k level so far so, if some profit taking can develop to allow for that gap to fill the longer-term backdrop could be a bit more attractive for big picture continuation scenarios.

SPX Daily Price Chart

--- written by James Stanley, Senior Strategist