Daily Report on September 23, 2016
Asian shares eased and European shares opened lower on Friday as the U.S dollar rebounded and oil prices cooled down following two sessions of strong rises. The MSCI Asia Pacific Index pared some of the gains from its biggest weekly rally in two months, to trade 0.3% lower, while Japan’s Nikkei225 dipped 0.1%. The U.S dollar index, which tracks the strength of the greenback versus a basket of major currencies ticked up 0.14% to 95.50.
Crude prices retreated from two-week highs in early Asian trade, dragged down by a technical sell-off and by cautious sentiment ahead of a gathering of OPEC ministers next Monday in Algeria. On the sidelines of the International Energy Forum, OPEC and non-OPEC members will attend an informal meeting to discuss possible cooperative actions to stabilize the oversupply situation in the oil market.
Data from research group Markit on Friday reported that Japanese manufacturing activity in September expanded for the first time in the last seven months. On a seasonally adjusted basis, the country’s flash Manufacturing Purchasing Managers Index (PMI) rose to 50.3 in the current month from a final reading of 49.5 in August.
In the U.S, jobless claims dropped to their lowest level since July 2015, Department of Labor said on Thursday. The number of individuals who filed for unemployment insurance for the first time during the past week slid to 252,000. The number of weekly jobless claims have remained below the 300,000 level, which is associated with a firming labor market, for an 81st consecutive week,
GBPUSD retreated after the price action hit the downward sloping trendline connecting higher highs since June 29. At the same time, the prices fell back below both the long-term and short-term MA’s, indicating that the up moves recorded earlier in the week were a result of profit taking by shorts. GBPUSD is expected to extend the slide as the RSI index has dipped below the 50 line, suggesting a comeback by bears.
Buy Digital Put Option from 1.30200 to 1.29500 valid until 20:00 GMT September 23, 2016
USDJPY pulled back from the resistance at 101.200 following a period of correction. Bears have jumped in at the right time and restrained the RSI index from breaking above the dividing line between bullish and bearish territory. The price action remains under downward pressure from two MAs placed above the price action. The pair is forecast to re-attempt the support at 100.000.
Buy Digital Put Option from 100.600 to 100.000 valid until 20:00 GMT September 23, 2016
The Euro has reversed higher versus the CHF, after a sharp decline that sent the pair back below the 50.0% Fibonacci level. The stochastic and RSI charts are both indicating that the pair has pulled back from the oversold zone. However, lower lows simultaneously created in the price action and the indicators still suggest a strong bear that is likely to push the pair towards the 38.2% retracement level.
Buy Digital Put Option from 1.08860 to 1.08411 valid until 20:00 GMT September 23, 2016
Natural gas is moving sideways to ascending pattern, while holding above the support at 2.975, after falling from record highs around 3.090. Long bodies of the bearish candles show the cautious sentiment among investors as the market seems to quieten as it nears the recent highs. We have received a “bounceback” signal from the stochastic chart, which indicates a possible rise in the price. Natural gas may soar back above the short-term MA20, after a brief ongoing test of this level.
Buy Digital Call Option from 3.010 to 3.030 valid until 20:00 GMT September 23, 2016
Brent crude is coming off the highs following the strongest rally in the last two weeks. Although the MA20 has penetrated the MA50 from below, the upside in crude prices today seems limited, as buyers who have fueled the surge may attempt to take profits off the table and close out longs ahead of the weekend and the meeting between oil producing nations, right at the start of the next week.
Buy Digital Put Option from 47.20 to 46.75 valid until 20:00 GMT September 23, 2016
As can be seen from the chart, the lower boundary of the upward slopping trading range which had acted as a support for the Euro Stoxx 50 index, is now playing the role of a resistance from which the market reversed lower. The Stochastics are indicating that this is a correction as the market has entered the overbought zone. With the support from the two MAs placed below the price action, the index is expected to bounce back from the support at 3016.50.
Buy Digital Call Option from 3016.50 to 3062.00 valid until 20:00 GMT September 23, 2016