Are Gold Options Looking For Some Love?
The pair made a fresh high in the Asian session yesterday where it tested 1.3420 resistance level after which it started to plunge in the European session. The pair played above its critical level of 1.3325 before the FOMC meeting minutes in the US session, but experienced a sharp fall after the speech given by Ben Bernanke in FOMC Statement.
The pair fell by more than 100 points and is currently standing at its support level of 1.3235, where a break below this level could lead it to test its next support of 1.3205 where buyers could enter again. The pair closed well below its critical level of 1.3326 so technically it is bearish, but a reversal is expected where a move above 1.3290 could take the pair to test its daily pivot point at 1.3326 and then its resistance level of 1.3357.
The pair closed below the critical level of 1.5660 on Tuesday due to which it entered the bearish zone; therefore, the pair followed its technical move yesterday where it couldn’t break the resistance level of 1.5676 but instead allowed more sellers to enter at that level.
Pound plunged drastically against the U.S dollar in the U.S session on Wednesday just after the release of FOMC statement. After losing more than 200 points the pair is currently hovering above its support level of 1.5425 where a correction on the upward side is due. If it breaks its mild resistance of 1.5470 then it would target its daily pivot point of 1.5539, breaking of which could show 1.5583. However, if it breaks its double bottom of 1.5425 then it may go down till 1.5402 where heavy buying may be seen as this would be a psychological level with sentiment trending downward.
The important levels for gold and gold options pricing that were given yesterday were hit as it broke down the crucial support level of 1366.90. It went down to test 1355.2 and then tested 1339.3 as well. The precious metal has just tested 1322 support level after which it may head upwards, but we would have to wait and see whether the European session takes the metal further down or not. If it breaks 1321 level then it may go down till 1309, 1300, and 1291.
FED Chairman Ben Bernanke revealed in yesterday’s FOMC statement that the FED would continue with its $85 billion easing plan and is not going to stop it at least until the 4th quarter of 2013. The labor market has improved but the unemployment level must be brought down further and the QE plan is expected to bring it to around 6.5% by the end of 2014. Moreover, the housing sector has showed positive sign as the consumer spending power has also witnessed a positive change but the inflation targets are yet to be achieved. The dollar was expected to weaken but it got stronger mainly due to the technical move which the major pairs and the precious metal were in. However, the stock market is expected to be controlled by bulls yet again as the money supply would continue that would help the investors invest more, businesses flourish, and create more employment opportunities.