EUR: Dancing On The Trend Line
Matthew Bradbard | Nov 06, 2013 12:36PM ET
After trading near two-year highs just last week, Euro futures have backed off 2.2% finding support near its 38.2% Fibonacci level as seen on the chart below. The darker blue line is your 50-day MA and may serve as the line in the sand as December futures have remained above that pivot point since penetrating that level in early September. Coincidence or not that was within a few days of challenging the trend line that is currently being tested back in early July. See the up-sloping trend line on the chart below. I am operating under the influence that this level will continue to hold and we rebound from current trade.
Ahead Of The ECB
ECB meeting on interest rates and press conference tomorrow. As of this post I suspect rates will remain unchanged at 0.50% though in recent sessions the Euro reacted as if we had the potential to see a cut...that likely contributed into the recent leg lower. Additionally do not rule out fireworks with other Central Bank meetings in the coming sessions and NFP Unemployment report out on Friday. Keep the dollar index on your radar as it is currently bumping into overhead resistance and a down sloping trend line that has existed since early July as well. Notice the inverse correlation to the Euro.
Trade Ideas
- Sell December $135 puts. 31 days until expiration, current trade has you collecting $1375 in premium. Current delta is 46% and you are out of the money by $375. On a trade to 1.3650/1.3700 this week I would buy back. Cut losses on a trade under $134
- Buy December $135 calls. 31 days until expiration, current trade has you paying $1725 in premium. Current delta is 54% and you are in the money by $375. On a trade to 1.3650/1.3700 this week I would offset.
- Long December futures with stop loss under $134. If risking $1250-1500 per lot look to make $1.50 for every $1.00 of risk so target $137.50 ish.
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