During the session on Wednesday, we anticipate that a lot of the action will be based around the United Kingdom. We have Claimant Change Count numbers coming out, which of course can have a great influence on the GBP/USD pair, as well as the FTSE. Because of this, it’s very likely that the announcement will create quite a bit of volatility. However, we still look at these charts the same way.
The FTSE looks like it’s ready to go higher, so we look at pullbacks as potential buying opportunities, via calls. In the GBP/USD pair however, we believe that any rally at this point in time will bring in quite a bit of selling pressure between the 1.59 level and the 1.60 handle. With that, we are buyers of puts in order to take advantage of the longer-term trend.
Looking forward, the market also appears to be ready to pull back as far as the S&P 500 is concerned. The market shot higher over the last several weeks, but ultimately this market looks a bit worn out at this point in time. A pullback offers a value as far as this market is concerned, and we anticipate that the 2020 level will bring in quite a bit of support. With that, we prefer buying calls on pullbacks.
Looking at the gold market, it appears that we are going to see quite a bit of resistance somewhere close to the $1180 handle, and stretching all the way to the $1200 level. We buying puts up in that region on signs of resistance, as it should continue to push the market lower and continue the longer-term downtrend. The US dollar continues to strengthen, and that of course will work against the gold markets over the longer term as the trend seems set.