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Home » Technical Analysis » Daily » Crude Prices Rally As Inventories Fall – All Eyes On FOMC

Crude Prices Rally As Inventories Fall – All Eyes On FOMC

Posted by Option_Banque in Daily - September 21st, 2016 11:44 am GMT

Daily Report on September 21, 2016

Oil prices extended gains on Wednesday, supported by a draw-down in U.S. crude inventories and firm import data from Japan. The American Petroleum Institute data on Tuesday reported that U.S oil stocks decreased by 7.5 million barrels last week to 507.2 million barrels, registering the third weekly draw-down in inventories.

Adding to the bullish sentiment in the crude oil market, the Ministry of Finance (MOF) on Wednesday reported that Japan’s crude oil imports rose 0.5% in August from the same month a year earlier. On average, the world’s fourth-biggest crude oil buyer imported 3.38 million barrels per day last month.

In the same report, the MOF stated that Japan’s exports fell 9.6 percent from a year earlier to 5.316 trillion yen, due to a strengthening Japanese Yen and weak overseas demand. Japanese exports have been sluggish for 11 consecutive months, while imports also declined 17.3% from a year before to 5.335 trillion yen.

In the U.S, new home construction fell by 5.8% in August to a 1.14 million annualized rate, as a plunge in the South, the biggest region for building, outweighed gains in the rest of the country. The report from the Commerce Department on Tuesday also indicated that building permits dropped 0.4% to a 1.14 million annualized rate. Both readings fell short of expectations.

The New Zealand dollar retreated overnight, after Fonterra Co-operative Group, the world’s biggest dairy exporter, announced that the Fonterra’s GDT Price Index climbed 1.7 percent in the auction held on Tuesday. The average international selling prices for milk rose to $2,975 per ton while volumes dropped 4.6% from the first auction this month to 35,086 tons.

Technicals

GBPUSD

The British Pound has been falling steeply over the last week or so, paring most of its gains in the period from mid-August to early September. The pair has broken through the ascending channel and the trendline support connecting the notable highs registered between late July and August. Lower lows created recently on the price chart, alongside with lower lows that have been formed on the indicator chart, indicate overwhelming bearish force in the market. The price action has broken through both the MA’s from above and both MA’s are now placed above the price action creating further pressure on prices.

Trade suggestion

Buy Digital Put Option from 1.29450 to 1.29000 valid until 20:00 GMT September 21, 2016

USDCAD

USDCAD is moving along the 20-period MA. The pair has not been able to decisively breach this zone of support and has had to reverse higher every time it tends to make a crossover through the MA from above. Bulls have kept the market in the bullish territory for quite a long time and the market is forecast to extend the rally as no fundamental factor will show up until the U.S session. The RSI is placed near the neutral threshold and therefore the market is expected to persist along the current path.

Trade suggestion

Buy Digital Call Option from 1.32000 to 1.32400 valid until 20:00 GMT September 21, 2016

GBPCHF

GBPCHF has been suffering some selling pressure recently after the pair started retreating from the two-month high at 1.31192 created on September 6. The pair is struggling around the 61.8% Fibonacci level at 1.27024 and is under downward pressure from the two MAs placed above the price action. The market seems to be in a period of consolidation with indicators providing little clarity in terms of decisive direction. GBPCHF is expected to make a break through the 61.8% level to the downside, after completing the consolidation as up-moves are struggling to register any significant levels.

Trade suggestion

Buy Digital Put Option from 1.27020 to 1.26250 valid until 20:00 GMT September 21, 2016

WTI

U.S crude price has breached the resistance at 44.50 but the up-moves are threatened by the two resistance lines connecting recent highs of significance between the August/September period. The market is in a bullish formation for the first time since last Tuesday, after the price action crossed over both the MA’s from below and the RSI providing a confirmation as well. Fundamental data and short-covering are on course to push the commodity towards the 23.6% retracement level at 45.56.

Trade suggestion

Buy Digital Call Option from 45.00 to 45.56 valid until 20:00 GMT September 21, 2016

COTTON

Cotton has been on a steady rise but currently witnessed some corrective moves after reaching over one-week highs at 70.75 at the market open today. The commodity not only created a gap up in the early Asian session but also covered the gap and is pointing downwards to the 38.2% retracement level at 70.00. As technical indicators are suggesting further advances, the 38.2% level is forecast to be a firm support that will force cotton prices to reverse higher.

Trade suggestion

Buy Digital Call Option from 70.00 to 71.50 valid until 20:00 GMT September 21, 2016

Dow Jones

Dow Jones’ trading range has been shrinking since last Monday and the price action is now in a triangle of congestion. The index has continuously created big gaps on the market open recently, indicating an unstable sentiment among investors. The RSI and Stochastic are nowhere near providing any decisive indications of the state of the market. A breakout can be expected through either side with equal probability as the collapse in daily volatility is bound to be followed by a major move in either direction as the triangle resolves itself.

Trade suggestion

Buy Digital Call Option from 18250.00 to 18355.00 valid until 20:00 GMT September 21, 2016

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