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Home » Technical Analysis » Daily » China Shows Signs of Stabilization, Oil Up on Failing Supplies

China Shows Signs of Stabilization, Oil Up on Failing Supplies

Posted by Option_Banque in Daily - October 19th, 2016 10:14 am GMT

Daily Report on October 19, 2016

China Shows Signs of Stabilization, Oil Up on Failing Supplies

Asian shares surrendered earlier gains as an unexpected slowdown in China’s industrial output overshadow gross domestic product figures that matched economists’ forecast. Chinese National Bureau of Statistics said that the country’s industrial output rose 6.1% in September from a year earlier, down from 6.3% in August and missing estimates of 6.4%.

However, there are still signs of stabilization in China as its economy was reported to expand by 6.7% compared to the same period last year, which is in line with expectations. On a yearly basis, retail sales also observed a rise that beat forecast and was up from August data. Chinese retail sales rose 10.7% in September, topping estimates and August readings which are at the same level of 10.6%.

Oil ticked higher on Wednesday on the back of the American Petroleum Institute’s report that showed crude stockpiles fell 3.8 million barrels in the week to October 14. The decline contrasted with forecast calling for a supply rise. The U.S. Energy Information Administration (EIA) is due to release official fuel storage data later today.

Also in the U.S, the Labor Department on Tuesday reported the consumer-price index increased 0.3 percent in September from the previous month, posting the fastest pace in five months. Compared with September 2015, the cost of living in the U.S. rose 1.5%, the most since October 2014. The report showed that the U.S inflation may be getting closer to the Federal Reserve’s goal thanks to a gradual pickup in housing and energy prices.

Elsewhere, the New Zealand dollar’s rally held on its strength as dairy prices reversed higher after a slump two weeks ago. At the latest Global Dairy Trade auction, the GDT price index gained 1.4% since the last sale early this month. The futures market turned to more tightening after Fonterra said it would reduce the amount of product available for sale at the auction due to lower-than-usual milk volumes for October.



Having reached three-month highs at 1.07632, AUDNZD slid below the 38.2% retracement. A short period of consolidation can be observed when the pair moved sideways above this level, however, the price action eventually crossed over a couple of moving averages and breached the 38.2% handle as well. This suggested a reversal into downtrend. Stochastic lines pointing downwards and ADX soaring as high as 34.38 also consolidates further declines.

Trade suggestion

Buy Digital Put Option from 1.06250 to 1.05750 valid until 20:00 GMT October 19, 2016


EURUSD resumed its downtrend after a correction from two-month-and-a-half lows at 1.09631. The pair had to give up its strength after hitting the short-term MA20 at around 1.10090 but has been trading in a thin range for a while. The bear, which is overwhelmingly dominant in the market as indicated by the RSI chart, is expected to sustain its strength after a period of gaining momentum

Trade suggestion

Buy Digital Put Option from 1.09700 to 1.09250 valid until 20:00 GMT October 19, 2016


EURJPY has breached the major support at 114.000 after being held above this level for two weeks. The pair has been under aggressively downward pressure created by two MAs hovering above the price action. Sellers continue to dominate the market and may damp the pair lower. EURJPY has penetrated a range that witnessed the pair moving sideways two time previously. If it can break below this trading range, EURJPY may find near-term support at 112.000.

Trade suggestion

Buy Digital Put Option from 113.550 to 112.000 valid until 20:00 GMT October 19, 2016


Gold hit one-week high at around 1265.00 but failed to retain its momentum. The yellow metal has generally been trapped in a trading range between the resistance at 1265.00 and the 38.2% retracement at 1249.76. Although the price action has crossed over the MAs which have converged below the price chart, the upside seems limited. A breakout above the 1265.00 level is not expected today.

Trade suggestion

Buy Digital Put Option from 1260.00 to 1250.00 valid until 20:00 GMT October 19, 2016


The support at 51.30 seems quite resilient as it continued to support the price to trade higher yesterday. In general, the commodity remains moving sideways above this level and under the control of two moving averages hanging above the price action. We are observing Brent struggling with the long-term MA50 again with the RSI pointing to bullish territory. However, to confirm the uptrend, the price action needs to decisively cross over the MA50 first.

Trade suggestion

Buy Digital Call Option from 52.30 to 53.30 valid until 20:00 GMT October 19, 2016


SP500 index has crawled back from the handle at 2145.00 for the third time for the past week. The index has turned its old support into a new resistance after it breached through this level on October 11th. The price action has broken above the short-term MA20 but remained under downward pressure from the long-term MA50. The market trend is not clear, which can be observed from the under-20 ADX index and a RSI moving around average level. Considering recent bullish candles that has short bodies and long upper shadows, the market is likely to be favor of the bear.

Trade suggestion

Buy Digital Put Option from 2135.00 to 2123.00 valid until 20:00 GMT October 19, 2016

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