The markets will be very difficult to deal with over the next couple of sessions. We have no doubts about this as the Greek debt issue continues to cause a lot of problems. However, we recognize that perhaps some of the knee-jerk reaction at the open on Monday May have been overdone, as we are starting to see in the EUR/USD pair.
1 – The EUR/USD pair initially fell all the way down to the 1.10 level and then dipped even lower. However, we found enough support to turn things back around and start showing signs of real strength as we filled the massive gap in now could go higher if we can get above the 1.1225 level. We believe that the failure to hang onto the losses shows a real lack of conviction by the sellers.
2 – The DAX fell rather hard as did so many of the European indices. Quite frankly though we are still very bullish of the European stocks in general, and believe that all of the indices will find enough support to turn things back around, with that, we believe that the European indices in general will offer call buying opportunities in fully anticipate seeing some type of rally from the initial reaction.
3 – The GBP/USD pair initially gapped lower but then shot straight up in the air during the session on Monday. As we started getting close to the end of the day, the 1.58 level was being threatened and it now appears that the British pound will continue to strengthen. Because of this, we believe they call buying opportunities will exist on short-term pullbacks. With no interest in buying puts at this point in time as we believe there is plenty of support below.
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