Snow Storms in Chicago and Vegas, Continued Rally in Currencies, Setup For Next Big Trade

6:01 PM Pacific Time - Las Vegas - I would like to thank all of you who have sent me warm birthday wishes. It's once a year that we are simultaneously reminded of how lucky we are to be alive along with the fragility of our existence. While Chicago and Las Vegas shared similar fates brought down by the weather gods, the rally launched subsequent to the Fed's comments continued today. Allowing gold and currencies to rally higher, while leaving the dollar defenseless in its wake. Reitterating comments in my last blog, I am taken aback by the extreme rally in the EURUSD over the last eight days and find myself on the outside looking in for an opportunity to buy future dips. Further complicating the affair is a relatively illiquid market that saw the equity indexes slow to a craw, as a number of traders in Chicago never made it to the Pit and eMini Volumes substantially lower than their two-month averages. Taking on a nimble posture is paramount now as the S and P 500 futures rest slightly above the 50 day moving average and the next high probability trade entails waiting for a pullback in these currencies (EURUSD, AUDUSD, USDCHF, USDJPY). Here are some of the updated levels worth taking on exposure during the next pullback: EURUSD - 13750 on the spot sets up for some nice buy point using Fibonacci Friends (see my book One Shot - One Kill Trading) and retests the former batch of mid October highs. I can see the 15 period moving average rising up to provide a natural place to get a meaningful reaction bounce. From here a 250-400 pip move is just the reaction and taking on option exposure in here is a safer way of playing this in light of the increase in implied volatilty as range is once again expanding in this cross. USDJPY - 9005-27 - Continued weakness and multi-decade (1995) lows compel this trader to continue selling bounces as anything with a USD acronym is geing thrown out like the trash over the last week. Use this level to sell into this move and even take on some bear calls spreads. I prefer to use CME options as they have shown me to be tigher. ( To learn more about setting up option spreads on Forex, check out my webinar schedule at www.tradebondfutures.com) Gold (Feb COMEX ) 836-844 - Play a reaction back to 900 as this metal has been the best performing commodity during the down move and is taking it's place following Fed rhetoric that illustrates the US Goverments desire to turn on the presses. As long as inflationary sentiment rules the market, and a move away from the USD, this is a vital component of a trading portfolio and should be until that sentiment shifts. I hope to see everyone in SniperScope Tomorrow and wish you all the best of luck. If you have any questions, please go to the weekly webinar tab or send an email to jnetto@tradebondfutures.com Cheers, John Netto . . . (to read the remainder of this article, please log in below.)