Daily Technical Analysis by Option Banque

Daily Report on August 30, 2016



Asian stocks gained on Tuesday following the advance in U.S stocks overnight, with all three U.S equity benchmarks closing higher overnight. On Wall Street, the Dow Jones ended yesterday’s session up 0.58 percent to 18,502.00, the S&P 500 rose 0.52 percent to finish at 2,180.28 while the Nasdaq added 0.26 percent to 5,232.33, as bullish sentiment was fueled by evidence that the world’s largest economy is growing.

Reports from the Commerce Department released on Monday reported that U.S consumer spending rose for a fourth straight month in July at the pace of 0.3%, based on strong demand for long-lasting manufactured goods such as automobiles, and rising household income. Meanwhile, the core personal consumption expenditure (PCE) price index, which excludes the volatile food and energy components, inched up 0.1% in July, maintaining the same pace as in June.

As a result, the core PCE – the Fed's favorite barometer for inflation - increased 1.6 percent on a year-over-year basis, remaining below the fed's target of 2 percent. To fully assess the outlook for the U.S monetary policy, investors are now shifting their attention to the monthly jobs data on Friday, which is forecast to report that 180,000 more jobs were added in July.

Crude prices continued to trade in a thin range as a stronger U.S dollar and focus on surging output from the Middle East weighed down the speculation over an output cap deal next month, even after data from energy monitoring service Genscape reported a drawdown of 287,444 barrels at the Cushing, Oklahoma delivery point for U.S. crude futures during last week.



Technicals

NZDUSD
NZDUSD is trading in an upward trending price range with higher highs and higher lows. The pair has just pulled back from the lower boundary of the trading channel, at the one-week low of 0.72080. However the market keeps attempting a test of this support. The %K line reversed into a downward movement after surging close to the overbought zone and is likely to cross over the %D line from above. With the two MAs converging above the price action, the pair is expected to retreat further, but the support at 0.72080 should be broken through ideally before a short position is attempted.

Trade suggestion

Buy Digital Put Option from 0.72270 to 0.71880 valid until 20:00 GMT August 30, 2016



GBPUSD
GBPUSD fell back into the downward sloping range after failing to reach the 1.33000 psychological level. The MA20 has penetrated the MA50 from above, consolidating the down move following a brief correction. With the divergence between the +DI line and –DI line and the low reading on the RSI, GBPUSD is much likely to dip further.

Trade suggestion

Buy Digital Put Option from 1.30587 to 1.30000 valid until 20:00 GMT August 30, 2016



EURAUD
After a period of moving sideways around the 23.6% retracement at 0.47741, the pair has fallen below both this level as well as the 50-period moving average, which suggests further down moves. As can be seen from the RSI chart, the index has slid to 42.84. The bear is dominating the market and the currency pair is forecast to head downwards to the 38.2% Fibonacci level.

Trade suggestion

Buy Digital Put Option from 1.47440 to 1.47040 valid until 20:00 GMT August 30, 2016



COPPER
Copper is trading indecisively in a narrow range after a sharp selloff last week. The commodity is retreating from the MA20 and the resistance at 2.0904, and is anticipated to gather more bearish momentum as the –DI and +DI are converging, not to mention the RSI index is witnessing higher highs and higher lows but continues to stay below 50 and is pointing lower.

Trade suggestion

Buy Digital Put Option from 2.0745 to 2.0620 valid until 20:00 GMT August 30, 2016



WTI
U.S crude prices are experiencing a period of consolidation. Both sides are taking cautious steps which can be seen in the short bodies of recent candles. Buyers are failing to get the price action through the MA20, while sellers are not able to break through the support at the 61.8% retracement level at 46.87. The commodity is likely to drift slightly lower until updated fundamental factors provide direction later in U.S session.

Trade suggestion

Buy Digital Put Option from 46.88 to 46.40 valid until 20:00 GMT August 30, 2016



EURO50
The Euro Stoxx 50 index retains its bullish momentum and is flying higher within the upward trending range. The index has crossed over the moving average price levels, but has still been locked within the range marked by the support at 2977.50 and the resistance at 3015.00. The RSI index has soared above the 50 line, and is supporting a breakout above the 3015.00 level.

Trade suggestion

Buy Digital Call Option from 3015.00 to 3030.20 valid until 20:00 GMT August 30, 2016

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Daily Technical Analysis by Option Banque