As far as currencies, the GBP sure showed some strength after my post today, increasing nearly 100 pips in a matter of minutes. I still think this pair is over-sold and due for a nice counter trend rally here soon. What we would need to see is strength in the equity markets for this to really be a winner. So, until we get clear direction, I would have very tight stops on this going forward.
As I've been saying for a while; the dollar will weaken eventually and all these commodities are too over-sold in the short term. Since I like to explore new ways to play the commodities and forex markets, I think that the XME is a great way to play miners and metals. I don't have a position in this right now but any weakness tomorrow will make me seriously consider taking a long position with a target around $35.
Continuing on the dollar weakness play, OIH is forming a very nice base on its Fib retracement and fan support levels. Moreover, the volume has been better than usual and the three lower shadows are forming a rough inverted head-and-shoulders pattern. Neckline confirmation would be around $100. I currently have a long position in OIH (JAN Calls) which I've had for a while. If oil keeps falling of a cliff this week, I will more than likely add to this position.
Seems like I say this all the time, but I hope everyone survived the volatility today. Just think, one day we will look back on this and think how crazy the times were. I'm actually getting bored with these 500+ daily swings. Where are the days when the Dow's range was less than 100?
