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Today we are applying an Iron Condor on the XJO

Analysis:

The XJO has been tracking sideward in a broad range since roughly mid-September. The top of the range seems to be roughly 7,475 and the bottom of the range seems to be roughly 7,200. Recently, perhaps due to a Christmas rally, our market retested our all-time high and pulled back intraday. It then had the largest single day fall since the covid crash. Despite the volatility, the market continues to basically whip around and track sideward.

Considering this, we can look at an Iron Condor, with a late January expiry. The sold legs of the position should be above either 7,550 or 7,625, and below either 7,300 or 7,200. Provided the market stays in this trading range come expiry, maximum profit is made.

To stop the market either rallying too much or falling too much, and thereby protect the trade, there are plenty of key support and resistance levels. They are indicated by the blue lines in the chart below. In addition, the 50 and 100 day MAs are converging near 7,400, which has been a magnet since June last year. Indeed, today we closed roughly on them.

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