Tuesday November 23, 2021 - 13:30:26 GMT
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Is EURUSD 1.12 Being Defended?
Is this just a pause or is EURUSD 1.12 being defended? 1/12 is one of my key magic levels and an obvious options strike level.
Let’s say 1.12 is being defended by those who have written (i.e. sellers of) options at this key level. If so, then what does that mean for trading?
When a strike level is being defended, the seller of the option is trying to prevent it from being traded before the option expires.
In this case that would mean the options seller looks to buy EURUSD ahead of 1.12 and then sell it out on a bounce. In this way the options seller can reload by continuing to buy and then sell out the position as it defends 1.12.
This sets up a battle until either the options defense gets overrun or is successful in defending its position.
To be clear, I am not privy to any option being defended and am only pointing out how the process of protecting a strike level would play out.
The key here is to watch your charts for any levels that would break the technical risk to the downside. Otherwise expect the market to push for 1.12 in an attempt to spill blood in the market.
See the following for the pivotal levels that will dictate whether the defense of 1.12 would be successful or not.
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