If you’re a trader who swears by technical analysis (TA), you’ve likely faced moments when charts, patterns, and indicators seem to be working perfectly—until a single tweet from Donald Trump turns everything upside down.
“China is ripping us off. Big tariffs coming!”
The market reacts instantly—futures nosedive, volatility explodes, and your once-perfect technical setup is now worthless.
The Trump Effect on Markets
During his presidency and beyond, Trump’s tweets have been known to move markets in ways that no moving average, RSI divergence, or Fibonacci retracement could predict. A well-formed breakout can get obliterated in seconds by a tweet about trade wars, tariffs, or even an offhand remark about the Federal Reserve.
Consider this: You’re watching a stock or an index that’s in a clear uptrend. The moving averages are aligned bullishly, volume supports the move, and even your favorite oscillator confirms strength. Then suddenly, Trump tweets something like:
Why Technical Analysis Fails Against Political Volatility
Technical analysis is based on historical price action, assuming that patterns repeat over time. But it struggles to account for sudden, unpredictable news shocks—especially those coming from influential figures with massive reach. Trump’s tweets often acted as catalysts for short-term market chaos, overriding key levels and invalidating signals.
Examples of Trump’s Market Moves
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December 2018: The Fed & Market Panic
Trump’s criticism of the Federal Reserve and its chairman, Jerome Powell, sparked a sell-off in the stock market. The S&P 500 had technical support levels, but his tweets fueled fear, pushing prices through those levels. -
August 2019: Trade War Escalation
Trump announced new tariffs on China, leading to a sharp drop in equity markets. The charts may have signaled consolidation, but the tweet-induced panic caused a breakdown instead. -
October 2019: U.S.-China Trade Talks Optimism
Just when markets looked weak, Trump tweeted about “great progress” in trade talks, sending the markets soaring—invalidating bearish technical setups.
Can You Trade Around This?
If you rely purely on technicals, you might need to incorporate news sensitivity into your strategy. Here are a few ways to adjust:
- Keep an eye on social media – Trump’s tweets often dictated market movements, so traders had to adapt by monitoring his Twitter feed.
- Use stop losses wisely – Tight stops can get hit easily in volatile conditions, so consider adjusting your risk management approach.
- Hedge with options – Options can provide protection against unexpected market swings triggered by high-profile tweets.
The Takeaway
Technical analysis works—until it doesn’t. When political figures like Trump introduce unpredictable volatility, traders must be flexible. Ignoring fundamental catalysts, especially social media-driven ones, can be costly. While TA remains a valuable tool, combining it with real-time news tracking is essential in today’s fast-moving markets.
Would you trust technical analysis in a world where a single tweet can change everything? Send us your comments in the comment form below!
