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Oct 28, 2016

04:21 AM EDT

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Market Analysis

Posted by Option_Banque in Daily - October 10th, 2016 11:05 am GMT

Daily Report on October 10, 2016

Asian stocks were almost unchanged on Monday after the second U.S presidential debate between Hilary Clinton and Donald Trump. Financial markets continue to retain their view that Democrat Clinton holds an edge going into presidential election against her Republican rival. With major Asian markets including Tokyo, Hong Kong and Taiwan closed on Monday on account of local holidays, the MSCI Asia Pacific index gained less than 0.1%.

Chinese stocks rallied in the first session after a-week-long break, as the local currency dipped to a six-year low against the U.S dollar. The Chinese Yuan sold off on the back of the central bank’s announcement last week that the country’s foreign exchange reserves dropped more than expected in September. This drop in reserves marked a decline for the third month in a row and once again rang alarm bells over capital outflows from the world’s second-largest economy.

Downward pressure on the yuan also rose because the U.S. dollar has continued to strengthen on the back of labor market data that has been officially stated by some Fed officials to be strong enough to support a possible U.S. interest rate hike later this year. The US market is also closed on account of the Columbus Day holiday today.

Oil prices are paring early losses stemming from a statement by Russia’s Energy Minister Alexander Novak. Minister Novak expressed his belief in a potential deal this November when OPEC and non-OPEC oil producers gather to discuss details over a new output ceiling, but stated that he was not expecting to reach an agreement with OPEC at the World Energy Conference, which is being held from October 9th to 13th this week in Istanbul.

Elsewhere, USDJPY reversed lower following a gap up on the market open on Monday. Speaking on Saturday, Bank of Japan Governor Haruhiko Kuroda stated that the central bank “will not hesitate” on monetary easing if necessary, but based on the moderate recovery witnessed recently, which has been supported by hefty fiscal stimulus, further easing is not warranted for the time being.



USDCHF has trimmed some of the losses from the slide on Friday and looks to be resuming the uptrend and getting back to trade above the 38.2% retracement level at 0.97800. The short-term MA20 continues to play an important role in containing the price fall and forcing the price action to reverse higher. With the RSI index bouncing back from the 50 line, we can observe that the market was restrained from entering into bearish territory. The market is likely to attempt a test of the resistance at 0.98170.

Trade suggestion

Buy Digital Call Option from 0.97900 to 0.98170 valid until 20:00 GMT October 10, 2016


EURJPY failed to breach the resistance at 116.000, the same level that had prevented the price from surging higher in the first half of September. The price action has penetrated the 20-peiod moving average from above, signaling a reversal into a downtrend. The RSI index has moved past the 50 threshold but we would need the index to fall deeper to confirm the downside as the index is currently swinging back and forth around the average line.

Trade suggestion

Buy Digital Put Option from 115.000 to 114.650 valid until 20:00 GMT October 10, 2016


The Aussie has pulled back from the resistance at 23.6% level, which has turned into a new zone of resistance after the market fell through this zone towards the end of last week. This zone has served as a firm zone of support through September and therefore the breach becomes significant. The market opened with a gap up today, but gave up the gains in early Asian trade and fell back below the MA20. With downward pressure exerted by the two MAs placed above the price action and bearish sentiment visible in the RSI as well, the pair AUDUSD is expected to extend the down moves.

Trade suggestion

Buy Digital Put Option from 0.75850 to 0.75550 valid until 20:00 GMT October 10, 2016


Gold rose back above the 38.2% retracement level at 1249.91 after dropping below this level for the first time since late-May. As can be seen on the H1 chart, the short-term MA20 has converged with the long-term MA50 from below, indicating an upmove. Other indicators are also confirming the current up-move. While RSI has soared to 59.64, ADX is surging higher in the wake of the widening distance between the +DI line and the –DI line.

Trade suggestion

Buy Digital Call Option from 1265.00 to valid until 20:00 GMT October 10, 2016


Brent crude has been moving within a range between 51.30 and 52.00. The price action created a gap down on the opening today, but is paring earlier losses. A sharp down move on Friday pushed the market below the moving averages. However, considering the Stochastic chart where the %K line has crossed the %D line from below and is running ahead of the %D line, Brent may attempt a test of the upper boundary of the range at 52.00

Trade suggestion

Buy Digital Call Option from 51.60 to 52.00 valid until 20:00 GMT October 10, 2016


From the price chart, we can see a rebound in the Euro Stoxx 50 from the 38.2% Fibonacci level at 2996.36. The market is struggling with the 50-period moving average and is likely to break through this resistance level as the %K line has crossed over the %D line from below, which indicates a potential up-move coming up.

Trade suggestion

Buy Digital Call Option from 3010.00 to 3040.00 valid until 20:00 GMT October 10, 2016

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