During the Tuesday session, by far the most important announcement is going to be the ISM Nonmanufacturing PMI numbers. With that, we believe that a lot of the action will be in the US stock markets, and then possibly the US dollar. Looking at the S&P 500, you can see that we fell rather significantly during the session on Monday, but we also see the area between 2020 and 2000 has been rather supportive. Because of this, we feel that waiting for supportive candle in order to buy calls to continue the uptrend is probably going to be the best way to play this market.
The EUR/USD pair has broken down below the 1.20 handle, but at the end of the day it is a sick zone on the monthly chart that offers massive amounts of support. We bring this to your attention not as a trading signal for trading idea, but rather a word of warning as this could be the bottom of the downtrend. Even if that’s the case, expect a lot of volatility and very choppy trading action.
Looking at the DAX, we fell hard during the course of the session on Monday, slicing through the €9500 level. However, we believe that there is massive amounts of support at the €9400 level, and somewhere in that general vicinity we should see a supportive candle that we can serve buying calls from. That’s exactly what you do, simply sit on the sidelines and wait for that opportunity.
Gold markets were bit choppy during the session on Monday, but generally positive. The $1200 level above still continues quite a bit of resistance pressure, and as a result we are looking for resistive candle in order to start buying puts. However, we would to stick to short-term charts more than anything else as the market looks rather range bound.