Today doesn’t offer much in the way of announcements, with perhaps the German Manufacturing PMI numbers being by far the most important announcement. That’s okay though, because the markets do need to calm down a little bit after quite a bit of volatility recently. Currently, the EUR/USD pair is testing the 1.28 level during US trading for Monday session, and we believe that the number will have an effect on both the DAX and the EUR/USD pair. Because of this, we will be watching that announcement for direction bias in the pair for the day. Ultimately though, if the EUR/USD pair does rise, we prefer buying puts after the initial knee-jerk reaction higher. On the other hand, if we break down below the 1.28 level for more than an hour or two, we are willing to buy puts then as well.
The S&P 500 looks vulnerable to a slight pullback during the session, but look at this as potential value coming into play. After all, the 1980 level is massively supportive, and therefore we are willing to buy calls on supportive candles closer to that region.
On a side note, if you have the ability to play the GBP/CHF pair, it looks as if it’s ready to break out to the upside.
During the Monday session, silver got absolutely pummeled at first but bounce significantly in order to form a hammer. Watch that marketplace, because we break back above $18 – that could be a sign of a potential whipsaw. On the other hand, we have broken down through so significant resistance so a lot of times you will see a bounce and then an acceleration of momentum to the downside is more and more traders get involved.