Markets Catch a Bid Into Fed Week, Points of Control for Dec 12-16

John Netto - President - 6:30 PM PT Sunday With the US Dollar coming under pressure last week, commodities showing strength, and equity markets closing in the upper end of the weekly range, focus shifts to the Fed's decision on rates for the upcoming week. While the Fed Funds Futures price in around a 70% chance of a .75 bps cut, what's more important for traders to look at are points on the charts that let us know when this current rally has lost legs, and when our bias should resume back to selling rallies. Below are listed the major levels that should the markets hold, a bullish, buy-the-dip posture, should be taken with trades. I will update these levels throughout the week with EURUSD - 132.50 USDCAD - 125.25 - Action below this level is short term bearish for the USDCAD EURJPY - 120.57 - Action above this level is bullish for EURJPY February Gold - (GCG9 - Comex) - 808 - Any pullbacks that hold this level should be bid into US 30 year Bonds (US M9) - 132-25 - Action above this level is bullish S and P 500 Futures (ES M9) 865 - Action above this level is bullish USDJPY - This is the one albatross on things but we have seen a decoupling of the currency markets to the equity, most notably in this cross in here. The greenback still seems particularly vulnerable in this cross and this sentiment will persist with action below 9250. However, I think if this can rally to 95, there will be a great chance to step in and short. My next blog will come Tuesday... . . . (to read the remainder of this article, please log in below.)