The Greeks have been holding the market somewhat hostage lately, and now that they are starting to capitulate to the European Union, it is possible that the markets will have more of a “risk on” type of situation and attitude. With that being the case, the market looks as if we should continue to see buyers in the riskier assets, especially if a deal is worked out over the weekend.
EUR/USD will be the epicenter
We believe that the EUR/USD will be the epicenter of action if there is some type of agreement between the Greeks and the Europeans. During the session on Friday, the market tested the 1.12 level in anticipation of a potential move higher. With that being the case, if the market pulls back we believe that the short-term charts will be where you can find buying opportunities on supportive candles. We believe that the market will reach towards the 1.14 level given enough time, and that the 1.10 level below is the floor.
DAX takes off
Without a doubt, the Germans probably have the most to gain by some type of agreement. With that being the case, it’s no surprise that the DAX took off to the upside, and that we are going to close strong. With that, we are most certainly call buyers in this market and look at pullbacks as potential value. We believe the market should then head to the €11,600 handle.
S&P 500 could be a play as well
The S&P 500 rallied during the session on Friday, as we continue to bounce around between the 2040 level on the bottom, and the 2080 level on the top. If we can break above the 2080 level, we would be call buyers, just as we would buy calls after short-term pullbacks in order to take advantage of value as well. We have no interest in buying puts as we believe the S&P 500 will benefit from a Greek solution.
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