Looking at the Tuesday session, there’s almost nothing to move the markets, with perhaps the exception of Gov. Carney out of the Bank of England speaking. If he says something rather dovish, the FTSE should continue to go much higher, and it could work against the value of the GBP/USD pair. In fact, we believe that those are the two markets that will be most paid attention to, during the day.
Looking at the GBP/USD pair, you can see that we did bounce a bit during the Monday session, but there is plenty of resistance above. Because of this, we anticipate seeing some type of resistive candle above, probably at a large number such as the 1.52 region. We would be willing to buy puts in that area, or upon any type of resistant candle.
Looking at the FTSE, we fell to the 6850 level during the session on Monday, but turned back around and formed a relatively neutral candle. Because of this, if we can get above the 6900 level, we are buyers of calls as we should then head towards the 7000 level which we see as the next major barrier. If we can get above there, the FTSE becomes more or less a buy-and-hold type of market.
The S&P 500 had a slightly positive session during the day on Monday, showing that there is in fact a little bit of support below, and now we believe that the S&P 500 will continue to grind higher. We buy calls, anticipating a move to the 2100 level. If we can get above there, we feel that the S&P 500 will in fact head to the 2200 level next, and remains bullish overall.