Last week’s recap
The calendar is what shaped the thinking. US Congressional elections fall on 3 November, and the Republicans are doing badly in the ratings. Trump has twice replaced the head of the Statistics Bureau over these two years. Last week brought the US CPI — and the next one is only on 10 November, which is to say after the elections. The Fed meeting sits in between.
So the reasoning was: for them not to hike, they would need data showing inflation at least unchanged and ideally lower — and that with the ongoing blockade of Hormuz. They have their Hollywood over there and the scriptwriters are good, so the expectation here was a decline in the reports instead of a rise, followed by a cheerful two-day to-the-moon on the risk assets.
Which is why last week’s decisions off dollar strength were taken extra carefully, and the moves were only taken toward the end of the week.
In the end they did not paint the data, which is surprising — and now the Fed can boldly hike. That same day the hike odds immediately evened out on CME data, and by the end of the week they went back to the original picture.
EUR
The interesting part is the Monday-to-Wednesday range. A zone is forming at the current price and becomes active as an entry point if the euro opens up — for now there is none.
At 1.1186 there is a limit from Thursday, and the synthetic’s breakeven sits there too, from Friday, together with the 25% balance zone for tomorrow. Up top a limit was placed back on Tuesday and is still sitting in the market.
For sells the main target is the zone at the current price. Once those are worked off first, with a rise from the market open, buys off that zone come into consideration with a target at the zones above. Taking those is only a 5% chance by the end of the week — but by 28 October it is quite realistic as a target, and from there a correction toward around 1.13.
Further out, provided there is no rate hike on the 28th — and the probability of one is only 15% at the moment — the plan is to buy back toward the upper Debts until expiration. That is where the euro’s Debts run out.
On the lows the slabs are all still there and confirmed, but the wait for them was Wednesday, on a spill. Right now there is a buy-back to the Balance boundary, and until Wednesday’s new low the sell side only gets worked at 1.1380.
GBP
There is someone participating and working here. It gets worked in this form if they spill it tomorrow. The options are opened too interestingly not to work with them.
AUD
This area becomes interesting if they open up with a rise tomorrow. Into the Fed, a target of around 150 points looks quite tempting.
That kind of expansion will not last long on the kangaroo, and neither will a high entry straight to 7091. More likely the shape is: a bit up, an insignificant pullback, then more growth for the same 150-odd points. If they give a spike up as marked, the plan is to buy back off 6939.
Gold
In the morning and until Europe, all the attention is here. The weekly maximum-volatility zone up top converged at a single point, which makes buys on a move of around 170 dollars quite interesting to consider.
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.