As equities continue to gyrate over respective medium term support levels I do not feel particularly tempted to get sucked into placing any haphazard directional plays. Precious metals are not making it easy for us either but appear to be more promising as there remains significant upside potential.
With Yellen pretending to hike rates and Draghi pretending to lower them a strengthening Euro wouldn’t make much sense in principle. Which is exactly the reason why a Dollar put has worked so well over the past few weeks. When playing poker there invariably comes a moment when you’re being called to show your hand. And that’s exactly what forex vigilantes are doing right now. You may be the bank and you may be making the rules. You may even go as far as change the rules whenever it suits you. But as the old saying goes: Bullshit talks, money walks.
Last evening’s weakness in equities continued overnight and we are now finding ourselves back at the diagonal support line that has provided an entry base for the past month. Although well established it doesn’t mean that support is chiseled in stone here, which is why I am considering a binary setup. Here’s how we play it:
The evil Santa theme I facetiously posted yesterday appears to have been more prescient than I would have cared for. Equities literally turned on a dime and continued to dive lower all day. Suffice it to say that I’m a bit miffed as we may have missed the boat here. In retrospect this was a good spot to grab some shorts but without a bit more context and only half a session after the FOMC announcement jumping into entries seemed premature. It’s conceivable that we’ll get another bounce ahead of Christmas but I’ll be honest – that was a strong move and the situation is looking pretty dire here.
On a side note: The whole ‘evil [...]