Last week’s recap
A thin week. Almost everything traded flat and nothing much happened. The CPI stayed put — no decline — which means September could easily come in higher, given the time lag oil puts in and the fact that the previous print was painted. Risk assets got a little gloomy on that.
After two days of inflation data, September rate-hike expectations dropped to about 35%, and through the end of the year they fell hard. The complicating factor is who is now in the chair: a completely non-public figure, unlike Powell, who at least appeared every couple of weeks. This one is a quiet type. So whether September brings a hike or not, there is zero clarity to trade off — which is itself a reason to lean on positioning rather than on a forecast.
EUR
Broadly, close to the maximum volatility of the Contract has formed up top, given the expiration timing. The Wednesday zone is good as well — open interest piled onto the visible levels nicely. There are no drivers in the market until Friday, and the probability of reaching 1.1793 is around 1%. Two options here for working buys, both confirmed from the clusters.
GBP
Interesting options went in here too, on the December contract and on the current one, on the zones of interest. The lower area is interesting overall, though for buying they probably will not correct that deep. Selling toward 1.3360 is the more interesting side, and one of the main sell options by the end of the contract. At the open, off 1.35, if they pull back, I will consider buys.
AUD
If the euro and the pound go on to finish off all the Debts up top, the Aussie heads to 72, and from there it is interesting to work toward 70. The maximum volatility of Wednesday and of the Week sits on the Reaction Level zones. From the open I will be watching the Liquidity zone and how they react to it — very interesting from the clusters, but no more than that.
JPY
Here is what is expected in volatility through the end of the week. The upside on the options is traded on Monday: the expectation priced in there is an intervention.
CAD
Worth a look this week. Off the white zones you can work, and I will set alerts there. Up top the main Debt is at 1.4050; on the downside I will watch work at 1.3675. The volatility lined up well here, so this one is on the list.
S&P 500
On the current contract there is something interesting to trade. On the December one it is close to ideal: on the exit from the open risk sits the maximum volatility of Wednesday, and that is where a stop option is worth looking at. The maximum volatility of the Week landed neatly on the safety spread. Somewhere around there is where I will be waiting for a reversal into a correction.
Gold
As warned last week, gold went up. The maximum volatility of Wednesday, of the Week and of the Contract are all interesting here — if the market gives that kind of volatility.
The plan, in one line
These are zones and scenarios being watched — the market decides, not the trader. Let price come to your levels and let the confirmations line up before you act. New to the terms? The glossary covers every structure named above.