Last week’s recap
A few good trades. Gold did what was shown here last week: down nicely from the marked area, back into the zone the shorts had been worked from, then up off the lower zones — those last ones were not traded here, because the wait was for a slightly deeper correction.
On the S&P there was a small overshoot beyond the zone into the options, which the high volatility accounts for. Longs were also taken on the pound and the yen, where the same kind of zones showed up on the spot chart.
EUR
The zones of interest are marked for Wednesday, for the week and for the contract — and with each one, the chance of breaking through it without a serious pullback off it first.
Visually it looks very good down at the lows: short off the zones above, takes at the lower zones. The ideal version is a drop right into the contract’s maximum volatility from 1.1633 — that is the main Debt on the euro and the defining point for where it goes from here. A break of it sends the euro to 1.1825 at minimum before expiration.
1.1573 is a different case: it is reinforced by a straddle. Better used as a take once the zones below have worked out. Selling off it is still a big risk, especially if they cannot update the low before Wednesday — the fresh PMIs land there, and they shake the currencies well.
So the grounds are there everywhere and it is clear what is being worked with. What the market actually gives is the other half. Worth noting alongside it: the expiration balance and the Debt on the euro, and where they come back to by December — the open question is whether that happens before Friday or only after the lower zones have worked out.
Gold
For now they have held it inside the portfolio’s range of interest, and there are four days left to expiration. After that they let it go.
The idea around 3800 has not gone anywhere, but this week added no clarity — we stayed inside the 4300 to 4450 balance. In principle this is an excellent opportunity for trading puts, and if that gets confirmed on the puts and in the clusters, the move down is confirmed with it.
DXY — the dollar index
The weekly close was rubbish. They could not push it up to 100.90 for a reaction, and then spilled it into the close because of the yen. There is no way out of that, which means no confirmation of a reversal into longs for now.
99.13 is being watched, but there are no ideas there until a break and a move up with confirmation of growth toward 103.90.
One thing worth keeping in view alongside the chart: China keeps dumping US government bonds, and given the sanctions imposed, selling Treasuries could well settle in as a habit. But the faster that dumping goes, the closer the next steps on Taiwan get. In the current reality that matters as much as the level does.
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 — and if this is your first visit, where to start lays out a reading order through the free material.