Sell on a level breakthrough of 1200 with 1175 target. Stop loss = 1220.
Reason for the trading strategy
In May, the interest rates on dollar-linked loans on the London interbank market grew, which signaled an increased likelihood of an increase in the basic interest rate in the US in the near future. According to the Federal Reserve Bank of St. Louis, LIBOR on monthly loans increased from 0.4359% to 0.4497% from 3 to 25 May; it grew from 0.6329% to 0.6667% for 3 month loans; it grew from 0.9072% to 0.9756% for 6 month loans; and it grew from 1.2318% to 1.3227% for 12 month loans. In May James Bullard, the head of the Federal Reserve Bank of St. Louis, shocked the market by declaring about three rises (by 25 bps each) in the base interest rate in the US this year. Today futures quotes on the US Federal Reserve rate allow only a 28% probability of their increase at the June meeting, but in July the chances are already 58%.