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Lesson of the week

This week's lesson · Sunday 1 Nov 2026

10 min read

Translated from the Italian original and checked number by number: if the two differ, the Italian text prevails.

The theme. The drop in artificial intelligence stocks reaches Tokyo; three central banks on hold, but with the door open for December; oil stays expensive, with the risk of new strikes on Iran after Tuesday's US vote.

The method. One order: Nikkei long, limit at 60,215, valid until 6 Nov 2026. The dollar/yen of 16 Oct stays in play; the gold of 2 Oct hit its stop on Friday.

To take home. A central bank on hold is not quiet news: what counts is what it lets you understand about the next meeting. And this week the drift alone is not enough: the Nikkei's edge comes from the rebound after a strong fall, on few cases.

The past week (26-30 Oct)

Three central banks on hold, three messages.

  • Fed on hold at 3.75-4.00%, voted 10 to 2: Cook and Hammack wanted the hike. Afterwards, Logan: «at least two more hikes are needed»; Musalem: hike «soon».
  • ECB on hold unanimously, but it discussed a hike.
  • BoJ on hold at 1.25%, 8 to 1, and for the first time since 2013 it says underlying inflation has reached 2%.
  • Why it matters: prices move on expectations, and expectations look at the next meeting. In Japan higher rates mean a stronger yen, which weighs on exporting companies.

The US data. GDP +3.4% against +3.2% expected; core PCE, the inflation the Fed watches most, +3.1% on the year, in line. Growth above expectations and inflation above 3%: the arguments of those at the Fed who want to hike.

Technology. Thursday Alphabet −12.6%; Friday Intel −28.6%, AMD −11%, Nasdaq 100 −3.46%, S&P 500 −1.82%. The fear of recent weeks: will the spending on artificial intelligence pay for itself? On Friday in Tokyo the artificial intelligence stocks: Tokyo Electron −5.2%, Advantest −5.9%, SoftBank −6%. The broker's Nikkei closed at 62,339.19, −13.0% from the early October high (71,620.75).

Metals and oil. Gold at 3,876 (−3.6% on Friday), lowest since October 2025; silver below 50 (−6.2%). Again gold down with rates and stocks down: the weekly does not explain it, it had its stop written beforehand, and on Friday it hit it. Brent at 113.4, WTI at 104.1: Trump has been presented with options for new strikes on Iran, and at Hormuz two tankers had incidents. Expensive oil means more inflation, and a Fed less free to stop.

Europe. Eurozone GDP +0.4% against 0.2%, France −0.1%. October inflation above expectations in Italy (5.6% against 4.6%) and France, below in Germany (2.8%); on Wednesday the eurozone figure.

The weekend. No strike on Iran. Trump says there will be no strike before the vote; Rubio, that the decision has not been made yet. According to the AP, US diplomats asked allies to prepare for new military action; Khamenei had the list of targets updated. Iranian Foreign Minister Araghchi says instead that, with the mediators' proposal, Hormuz could reopen in two days. OPEC+: December unchanged, according to Reuters and WSJ headlines (statement not read).

The week ahead (Italian time)

  • Monday 2 Nov, 16:00: ISM manufacturing (expected 54.6); 22:30: Apple and Palantir.
  • Tuesday 3 Nov: US midterm elections, Tokyo closed. Between Tuesday and Wednesday evening AMD, Qualcomm and Arm.
  • Wednesday 4 Nov, 11:00: eurozone flash inflation (3.9% for TE, 4.0% for investingLive); 16:00 ISM services (54.8).
  • Thursday 5 Nov, 13:00: BoE, a hike to 4.00% expected with a 7-2 vote.
  • Friday 6 Nov, 14:30: US payrolls (+65 thousand, unemployment 4.2%, wages +0.3%); 17:00 Ueda.
  • Further ahead, within the order's 20 sessions: CPI 10 Nov, producer prices 13 Nov, PCE 25 Nov.

What is already priced in. Fed 9 Dec: 25 basis point hike at about 72%. ECB 17 Dec: hike above 80%. BoJ 18 Dec: about 80% before the October meeting, not found since. BoE: Thursday's hike in full. An event priced in full moves little if it happens: what will count is the vote, if different from 7-2, and what it lets you understand about the next meeting.

If… then…

  • Nikkei (limit 60,215): a strike on Iran after the vote would lift oil, which Japan imports almost entirely; disappointing quarterly results (Apple, AMD, Arm) would extend the slide in technology. In both cases the Nikkei would head toward the limit, and the order would fill right in that fall.
  • Dollar/yen (now 157.514, invalidation below 155.60): strong payrolls usually lift expectations of a Fed hike and the dollar; if Ueda then confirmed the door open for December, the yen would rise and the price would head toward the invalidation.

Why the weekly exists. Over brief horizons the average move is crushed by noise: at 3 hours it is worth 2% of it. The move grows with time, the noise with the square root of time: 15% at 20 sessions, 26% at 60. With the stop at 2 ATR (two average days) long beats the cost on 8 instruments out of 14, short always loses: that is why the weekly is long only. It is the risk premium, plus the carry where the broker pays the swap. It is not a forecast: it works while markets rise, and in a three-year decline it loses.

  • The example: the DAX over 20 sessions rises on average by +0.282 ATR (in the last 3 years +1.000), but spread and swap cost 0.290 of it: edge −0.007, out by seven thousandths. Rising is not enough: it has to rise more than it costs to hold.
  • And admitted does not mean the drift is enough: the Nikkei over 20 sessions moves on average by +0.483 ATR, but with this stop and this target the drift alone makes −0.028 R net. The measured edge comes from the rebound after strong falls: a different bet, on fewer cases.

The ground and the swap (reading of 30 Oct 2026 at 21:59, server time): the same 8 admitted out of 14, S&P 500, Nasdaq, Dow Jones, Nikkei, gold, silver, oil WTI, dollar/yen. The long swap is collected only on oil WTI and dollar/yen, where it is worth 65% and 56% of the edge: if it turns, the edge shrinks. No change reported since 23 Oct.

Already in play (MetaTrader daily bars)

  • Dollar/yen, 16 Oct: limit 157.680 filled on 22 Oct; low 156.068 on 23 Oct, now 157.514, 17 pips against, with the stop at 213 pips. Confidence LOW, 2 out of 6. Time exit on 18 Nov 2026.
  • Gold, 2 Oct: stop on Friday 30 Oct, net R −1.13, the first loss in the weekly record.
  • The daily in one line: the gold short of 27 Oct touched the target, the S&P 500 short of 29 Oct expired without being filled.

Brake and track record. 6 weekly proposals: 3 never filled, 1 at stop, 2 open (dollar/yen and Nikkei). The 4 closed ones add up to −1.13 R, drawdown from the peak −1.13 R; the brake triggers at −12 R, it has not triggered. Plus 1 rejected, which the record follows anyway.

This week's orders. These are the method's orders, recorded beforehand and judged afterwards in the public record: they are not financial advice. This week a single line, with no watched or rejected ones (server time: Friday 30 Oct 2026 at 21:59).

Order 1 · Nikkei · long · PROPOSAL 2026-10-30-01

  • Entry: limit at 60,215, on the level 60,214.59 (3 distinct days: 25 Feb, 17 Apr, 29 Jul), 1.32 ATR below Friday's close and below the 20- and 60-session low (61,494.06), where stops pile up.
  • Stop: 56,995 (3,220 points, 2.00 ATR), below the solid level 58,298.72 (4 days: 9 Feb, 18 Feb, 21 Apr, 29 Apr) and below the 120-session low.
  • Target: 64,950 (4,735 points, 2.94 ATR), below 65,000.47 (3 days: 8 Jul, 25 Aug, 29 Sep); at 1.46 ATR from the entry there is 62,564.23, which can stop the rebound.
  • Numbers: cases with a fall of at least 11.3% in 20 sessions, as today. Shift +0.267 R, ratio 1.22 (below 2: it does not count yet), net R +0.239 (cost 9.4% of the stop). Confidence MEDIUM, 3 out of 6; cross-check consistent. Record warnings: 55 cases but about 3 independent episodes; with two filters the method takes the better one (the other alone +0.110, both together +0.275); mixed years, 2015 and 2016 against, 2024-2026 in favour.
  • Validity and time exit: limit until 6 Nov 2026; exit between 27 Nov 2026 and 3 Dec 2026, depending on the day of fill.
  • The reason: the risk premium on the Nikkei, taken on a pullback. The Nasdaq has the highest edge, but below the price it has no level of at least 3 days: the Nikkei is the first index that has one.
  • Invalidation: daily close below 58,300: the spring floor broken, the slide in artificial intelligence turns into a decline in Japan.
  • Risk: the quarterly results (Apple and Palantir 2 Nov, AMD 3 Nov, Qualcomm and Arm 4 Nov, Nvidia around 18 Nov), the US vote 3 Nov, payrolls 6 Nov, CPI 10 Nov; Iran after the vote, with Brent at 113; the Fed in hikes and the BoJ toward December. The limit fills first if the fall continues.
  • In plain words: the method waits for the Nikkei lower because after falls like this, in the following 20 sessions, it has returned more than usual, and after costs it stays positive. But the truly different episodes are about 3. It does not say it will rise again: a close below 58,300 invalidates it.

Summary

  • Nikkei · long · limit 60,215 · stop 56,995 · target 64,950 · until 6 Nov 2026

In play: the dollar/yen of 16 Oct.

This text is education: it is not financial advice or personalised advice, and it is not an invitation to buy or sell. It describes what a measured method does, with its mistakes written in the public record. The author may hold positions in the instruments mentioned. CFDs are leveraged instruments: you can lose more than you deposit. Prices from the ActivTrades terminal (MetaTrader 5), 1 Nov 2026 at 18:36 Italian time. Signed: Federico, the Zeta ant (full identity in the legal notes at formicazeta.com). This is a translation of the Italian original, checked number by number: if the two differ, the Italian text prevails.

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