Daily Market Updates & Trading Signals By Option Banque

[Option_Banque]

Put Options Favorable for Gas Futures As Bears Gain Momentum​

Natural gas futures fell on Thursday, dragging the price to less than 2.900 after retesting the historic channel resistance area following the announcement of US monetary policy. The technical bias remains bearish due to a Lower Low and Lower High in the ongoing wave.

Technical Analysis

As of this writing, the gas futures are being traded around 2.85. A support may be noted 2.82, the 38.2% fib level ahead of 2.78, the 50% fib level and then 2.71, the confluence of 76,4% fib level as well as channel support as demonstrated in the following four-hour chart.

On the upside, the futures are expected to face a hurdle near 2.89, the intraday high of today as well as channel resistance ahead of 2.93, the swing high of the last major upside rally. The technical bias will remain bearish as long as the 2.91 resistance area is intact.

Fed Monetary Policy

The US central bank Federal Reserve on Wednesday left its benchmark short-term interest rate near zero—for the 2,417th straight day—but dropped several hints after a two-day policy meeting that it is near seeing enough improvement in the job market to prompt officials to raise the rate as early as September. At the same time, the Fed flagged nagging concerns in its postmeeting statement that inflation remains too low, which is making officials hesitant on the timing for liftoff and inclined to raising rates very gradually after the first increase. The overall tone was taken as slightly dovish by the investors which is bullish for gas futures in the long run.

Binary Options Trade Idea

Considering the overall technical and fundamental outlook, buying the put options for gas futures appears to be a good strategy in short to medium term.

 

[Option_Banque]

Call Options Preferable In EURUSD As Channel Support Weighs

The price of EURUSD inched lower on Friday, for the fourth consecutive day, to less than 1.1000 before the release of Eurozone Consumer Price Index (CPI) report for the month of July. The technical bias is bearish because of LL and LH in the previous wave on daily timeframe. The pair is expected to hold range till the release of CPI report

At the moment, the pair is being traded around 1.0945. It is expected to face a hurdle near 1.0990, the 50% fib level ahead of 1.1074, the channel resistance and then 1.1100, the confluence of psychological number as well as 38.2% fib level. The technical bias will remain bearish as long as the 1.1128 resistance area is intact.

On the downside, a support may be noted near 1.0877, the 61.8% fib level ahead of 1.0817, the channel support as demonstrated in the following daily chart. A break and daily closing below the channel support could incite renewed selling pressure, validating a dip towards the 1.0000, the parity level.

In next few hours, the EuroStat is due to release the Eurozone Consumer Price Index (CPI) report for July today. It is considered a main gauge for inflation. According to the median projection of different economists, the CPI remained 0.2% in July as compared to the same inflation in the same month of the year before. Generally speaking, higher inflation figure is considered positive for the economy thus a worse than expected actual outcome will be seen as bearish for EURUSD and vice versa.

Binary Options Trade Idea

Keeping the technical and fundamental analysis in view, buying the call options of the pair near channel support appears to be a good strategy.

 

[Option_Banque]

USDCHF, GBPUSD, USDJPY Weekly Technical Analysis: 3 Aug to 7 Aug

USDCHF

Dominant bias: Bullish

Despite the fact that bearish attempts caused the support levels at 0.9550 to be tested a few times last week, USDCHF was able to maintain its bullishness. Since the support level at 0.9550 has become a strong barrier to bearish effort, it would be safe to assume that the bullish outlook on the pair will remain valid as long as price is able to stay above that support level.

The resistance level at 0.9700 is also a big challenge to bulls, for price could not break above it last week in spite of sincere effort by the bulls. A break above that resistance level would thus result in a smooth continuation of the extant bullish trend. The outlook would go bearish as soon as the support level at 0.9550 is breached to the downside.

GBPUSD

Dominant bias: Neutral

Cable has not been able to go below the accumulation territory at 1.5450 or go above the distribution territory at 1.5650 for weeks; therefore, the accumulation territory at 1.5450 and the distribution territory at 1.5650 could serve as boundaries for short-term swing trades.

In this week or next, price could move out of these boundaries, thereby giving way to a serious directional movement. In this month, GBP (and other GBP pairs) would most probably be weak in most cases, though there could be occasional bullish attempts on the way.

USDJPY

Dominant bias: Neutral

This currency trading instrument has been moving sideways since the middle of July 2015. A break above the supply level at 124.50 could result in a Bullish Confirmation Pattern in the market, and a break below the demand level 123.00 could also result in a Bearish Confirmation Pattern in the market.

This month, it is highly possible that Yen would gain lots of strength, thus causing JPY pairs to tumble. The strength in the Yen may start before the end of this week, and therefore, it is possible that USDJPY will go below the supply levels at 123.00 and 122.00 this week or next week.

 

[Option_Banque]

Gold, Silver Look Vulnerable In The Long Run​

GOLD

Gold fell by over 8000 points last month, testing the support level at 1084.90 before experiencing a pause in the bearish momentum. Price dived significantly, reaching the monthly low of 108.90 on July 24, 2015. Then it started moving sideways for the rest of the month. The bias on the market remains bearish, and when a breakout does occur, it is more likely to be to the downside.

The support levels at 1075.00, 1065.00 and 1050.00 could thus be tested this month. On the other hands, bullish attempts could force price to foray into the resistance levels at 1115.50 and 1125.50 – which are supposed to halt further northward attempts. Any movement above these resistance levels would mean the bearish bias could be over.

SILVER

Just like Gold, Silver also trended downwards in July 2015. However, price has been ranging in the last two weeks, showing that there would soon be a significant breakout in the market. When the breakout happens, it would be to the downside (just in favor of the extant bias), making price to test the accumulation territories at 14.3100 and 13.5000.

Should price go above the distribution territories at 15.2000 and 16.5000, it could result in a Bullish Confirmation Pattern, thereby rendering the bearish outlook invalid.

Binary Options Trade Idea

Considering the overall technical analysis, buying put options of precious metals on rallies around key resistance levels could be a good strategy for gold and silver digital options, range options and touch options. Gold and silver turbo options may also be traded near the above mentioned critical resistance levels for optimum return.

 

[Option_Banque]

Put Options Favorable For USDCHF Amid Overbought Sentiment

The price of USDCHF rose on Wednesday for the third day in a row, to more than 0.9775 after the release of some upbeat economic reports. The technical sentiment is bullish because of a Higher High and High Low in the ongoing wave on daily chart.

As of this writing, the pair is being traded around 0.9779. It is likely to find a support around 0.9677, the 76.4% fib level ahead of 0.9561, the 61.8% fib level and then 0.9467, the 50% fib level. The technical bias will continue to be bullish as long as the 0.9150 support area is intact.

On the upside, A hurdle may be noted around 0.9800, the psychological number ahead of 0.9864, the swing high of the last major upside rally as demonstrated in the following daily chart.

New orders for U.S. factory goods rebounded strongly in June on robust demand for transportation equipment and other goods, a hopeful sign for the struggling manufacturing sector.

The Commerce Department said on Tuesday new orders for manufactured goods increased 1.8 percent after declining 1.1 percent in May.

The Commerce Department also said orders for non-defense capital goods excluding aircraft – seen as a measure of business confidence and spending plans – increased 0.7 percent instead of the 0.9 percent rise reported last month.

Meanwhile manufacturing inventories increased a solid 0.6 percent, which was more than the government assumed in its second-quarter GDP snapshot published last week.

Binary Options Trade Idea

Considering the overall technical and fundamental outlook, buying the put options for USDCHF appears to be a good strategy in short to medium term.

 

[Option_Banque]

Buying Put Options Near 125.90 Still Preferable In USDJPY

The US Dollar (USD) extended upside movement against the Japanese Yen (JPY) yesterday, increasing the price of USDJPY to more than 124.50 ahead of some key economic events. The technical bias remains bullish due to a Higher Low (HL) in the ongoing wave on daily chart.

Technical Analysis

The USD/JPY pair is being traded at a fresh weekly high of 124.70, still shy from the top of its latest range around 125.89. The USD/JPY has been trading uneventfully since mid last week, and for the most indifferent to macroeconomic data, something quite usual in the preceding days of the release of the US Nonfarm Payroll report.

Yesterday Bank of Japan’s Kuroda said that the Central Bank sees no need for further monetary stimulus at the moment as they expect inflation to meet its target by the first quarter of 2016, which gave some limited support to the JPY that anyway was unable to advance firmly against its American rival.

Talking about short term, the one-hour chart shows that the price is finally advancing above a bullish 100 SMA after being stuck around it since the week started, whilst the technical indicators head north above their mid-lines, supporting a test of the mentioned resistance level.

In the 4 hours chart, the technical picture is also bullish, as the technical indicators have managed to recover above their mid-lines and head north in positive territory, although cautious is advice, as the pair will have a hard time breaking higher before Friday.

Binary Options Trade Idea

Considering the overall technical and fundamental outlook, buying the put options near the swing high of the last major upside rally could be a good strategy in short to medium term.

 

[Option_Banque]

Is This A Time To Buy GBPUSD Call Options?

The GBP/USD pair recovered from the yesterday’s low set at 1.5466, with the Pound recovering ground, despite the US rate hike optimism and UK service sector data which resulted worse-than-expected.

As of this writing, the pair is being traded at 1.5515. A major support may be noted near 1.5329, the swing low of the last major dip on daily chart as demonstrated in the following chart. The technical bias will remain bullish as long as the 1.5329 support area is intact.

The 1 hour chart shows that the price is holding above a bullish 20 SMA, whilst the technical indicators are losing their upward strength near overbought territory.

In the 4 hours chart, the pair is now above a horizontal 20 SMA, whilst the Momentum indicator is crossing its mid-line towards the upside, showing no actual strength at the time being, but enough to keep the downside limited around the strong static support placed at 1.5456.

The Markit Services PMI fell to 57.4 in July from 58.5 in June, although the most disturbing reading was the employment sub-component showing that hiring hit a 16-month low.

Today the US Bureau of Economic Analysis is due to release the Nonfarm Payrolls during the early New York session. The U.S economy is expected to have added 223,000 nonfarm payrolls in July, enough to allow the Fed to pull the trigger on its first rate hike in nine years. The Fed will consider a possible first rate hike at its Sept. 16 and 17 meeting, but economists say that even with a strong report, it is far from clear cut when the Fed will move off of the zero fed funds target rate it has had in place since late 2008.

Binary Options Trade Idea

Considering the overall technical and fundamental outlook, buying the calls options in cable appears to be a good strategy in short to medium term.

 

[Option_Banque]

Dollar Halts Rally Against Swiss Franc As Overbought Sentiment Prevails

The US Dollar (USD) continued downside movement against the Swiss Franc (CHF) on Monday, dragging the price of USDCHF to less than 0.9850 following the Friday’s Nonfarm Payrolls. The technical bias remains bullish due to a Higher High and Higher Low in the ongoing wave on daily chart.

As of this writing, the pair is being traded around 0.9831. A hurdle may be noted near 0.9850, the psychological number ahead of 0.9860, the swing high of Friday as demonstrated in the following daily chart.

On the downside, the pair is expected to find a support around 0.9700, the psychological number ahead of 0.9674, the 76.4% fib level and then 0.9558, the 61.8% fib level. The technical bias will remain bullish as long as the 0.9524 support area is intact.

The US Bureau of Economic Analysis released the Nonfarm Payrolls report on Friday. The report showed that the U.S. gained 215,000 jobs in July, largely matching expectations, and the unemployment rate stayed pat at 5.3%. The solid employment data offers little reason to upend Federal Reserve Chairwoman Janet Yellen’s plan to lift rates, possibly at the next two-day meeting of the Federal Open Market Committee, which begins on Sept. 16.

Generally speaking, an increase in the benchmark interest rate is seen as positive for the US Dollar (USD) and vice versa thus expectations about interest rate hike spurred bullish momentum in the price of USDCHF and other dollar pairs across the board.

Binary Options Trade Idea

Considering the overall technical and fundamental outlook, buying the put option of USDCHF around 0.9860 appears to be a good strategy in short to medium term if we get a bearish pin bar or bearish engulfing candle on daily chart.

 

[Option_Banque]

EURUSD Eyes 1.1435 As Bulls Gain Strength

The greenback saw some limited demand during the first two sessions of the day, reversing sharply lower against the Euro on the back of FED’s officers comments that toned down a rate hike in September.
The vice chairman of the US Central Bank, Stanley Fischer, said that they are still concerned about low inflation and won’t move before it sees inflation returning to more normal levels.
Following his words, Dennis Lockhart pledge once again for a rate hike, but this time he said it should come soon, omitting to refer explicitly to September as he did during the past week, triggering a USD sell-off.
The EUR/USD pair advanced to a daily high of 1.1041 before stalling, and holds firm above the 1.1000 level by the end of the day.

The technical picture is still bullish in the short term, as the 1 hour chart shows that the price extended well above its moving averages, with the shortest above the largest and maintaining its bullish slope. In the same chart, the technical indicators have lost their upward strength, but remain above their mid-lines.
In the 4 hours chart the technical indicators maintain a strong upward momentum whilst the 20 SMA contained the downside, supporting additional advances, particularly on a break above 1.1045, a daily descendant trend line coming from 1.1435, and the immediate resistance.

 

[Option_Banque]

Call Options Still Preferable For EURUSD As Bulls Gain Strength

China’s Central Bank devaluated the Yuan by 1.9%, the most on record, triggering a sell-off in commodity currencies that last all through the day. The dollar was benefited by the move, although European traders rushed to sell it and American ones to buy it back.
Greece reached a deal with its creditors that needs now to approved by the Greek Parliament and the EU finance ministers afterwards, probably the main reason of the intraday EUR’s rally, as local data was soft: German Wholesale prices fell by 0.5% compared to a year before, whilst the ZEW survey showed that local economic sentiment contracted, down to 25 in August, from previous 29.7. In the EU however, the economic sentiment, according to the survey surged to 47.6 against expectations of 43.9.
US data was also tepid, as worker productivity output increased at a 1.3% annualized rate from April through June, following a 1.1% decline in the first quarter of the year.
The EUR/USD pair surged to a 2-week high of 1.1087 after being as low as 1.0960, closing the day a handful of pips above its daily opening, with investors rushing to profit on rallies either side of the board.

The pair broke briefly above the daily descendant trend line coming from March high of 1.1435, but ended the day below it, which should discourage longer term buyers. The short term technical picture is still positive, as the 1 hour chart shows that the price holds above its 20 SMA and the technical indicators above their mid-lines, lacking however, directional strength. In the 4 hours chart the technical indicators have turned sharply lower after approaching overbought territory, although the price remains above a bullish 20 SMA.
Renewed selling pressure below 1.1000 should lead to a bearish continuation this Wednesday, while gains beyond 1.1045 may see the pair approaching the 1.1120 region.

 

[Option_Banque]

AUDUSD Eyes 0.7450 As Bullish Pin Bar Emerges

Key Takeaways:

• AUDUSD rallies as China’s turmoil increases demand for commodity currencies
• The pair leaves a classic bullish pin bar on daily chart
• Buyers are eyeing 0.7450 resistance area in the short term

The Australian dollar rallied against the US Dollar (USD) yesterday, increasing the price of AUDUSD to more than 0.7350 as the turmoil in China increased demand for commodity currencies as safe heaven investment.

AUD/USD bottomed yesterday at 0.7215 when the major collapsed from 0.7320 before entering a sideways drift that eventually garnered demand until aforementioned drop zone until 0.7280 support where further demand came in and took the pair to meet territory just shy of the psychological 0.74 handle at 0.7387.

In the 4 hours chart, the price is now above a bearish 20 SMA, whilst the technical indicators have corrected oversold readings, but lost their upward potential around their mid-lines. At this point, the pair needs to beat sellers around 0.7450 to be able to extend its gains during the upcoming sessions.
Binary Options Trade Idea
Considering the overall technical and fundamental outlook, buying the call options of the pair around current levels appears to be a good strategy in short to medium term.

 

[Option_Banque]

Dow Still Favorable For Call Options, FTSE100 Remains Negative

US stocks closed with limited gains on Friday, with the Dow Jones Industrial Average closing up 0.40% at 17,477.40.
On weekly basis, the DJIA managed to add 0.6%, despite all the wild moves triggered by China’s Central Bank decision on devaluing its currency earlier in the week.
Nevertheless, the longer term bearish tone prevails, as in the daily chart, the index remains well below a bearish 20 SMA, whilst the technical indicators remain well below their mid-lines, albeit they have lost partially their downward strength, due to Friday’s recovery.
In the shorter term, the index stands above a mild bearish 20 SMA, whilst the technical indicators head higher above their mid-lines supporting some intraday advances.

Sentiment towards the US indexes, however, remains bearish, and despite investors are not yet clearly selling on spikes, this scenario may become likely soon, should the US data reinforce the idea of a US rate hike next September.
Meanwhile the FTSE 100 closed at 6,550.74, down 0.27%, on Friday, and not far from the weekly low of 6,535 achieved on Wednesday.
The index however, closed the week with strong losses, amid Chinese intervention in the Yuan, although fears eased partially by the end of the week, something that may attract buying interest particularly with the index at current lows.
ftse17
Among the FTSE biggest winners was the travel firm Tui Group that surged 6.6% after announcing its annual profits were set to come in at the top end of expectations. Technically, the daily chart shows that the index remains well below a bearish 20 SMA, whilst the Momentum indicator heads slightly higher above the 100 level, but the RSI indicator remains in negative territory, around

In the 4 hours chart, the 20 SMA maintains a strong bearish slope above the current level, whilst the technical indicators have bounced from oversold levels, but are losing their upward potential below their mid-lines, suggesting little buying interest around the FTSE at the time being.

 

[Option_Banque]

USDJPY, AUDUSD Still Look Good For Call Options

The Yen weakened during the last few sessions, as the Japanese economy contracted in the second quarter, down 1.6%, as consumer and businesses cut spending.

The economic slowdown suggests the BOJ may need to add further stimulus to achieve its inflation target of 2.0% by the beginning of 2016, spooking investors.

he USD/JPY advanced up to 124.56, although poor US manufacturing data triggered a downward move towards 124.15, from where the pair slowly recovered during the US session.

Technically, the 1 hour chart shows that the price stalled around its 200 SMA, currently the immediate resistance around 124.60, whilst the technical indicators aim slightly higher in neutral territory, lacking clear strength at the time being. In the 4 hours chart, the price held above a flat 100 SMA, whilst the technical indicators are also stuck around their mid-lines, giving no clues on what's next for the pair.

Meanwhile the Australian dollar erased all of its intraday losses against the greenback, with the AUD/USD finding some intraday demand after bottoming at 0.7343 early in the American morning.

The pair is unchanged daily basis, and maintains a neutral tone, albeit compared with Friday's one, the daily candle shows a lower high and a lower low, increasing the risk of a break lower.

The short term technical picture is neutral, as the 1 hour chart shows that the price moves back and forth around an horizontal 20 SMA, whilst the technical indicators also lack directional strength, laying flat around their mid-lines.

In the 4 hours chart, the price managed to recover above its 20 SMA in the last hours, but the indicator has lost its bullish slope, whilst the Momentum indicator heads lower, approaching the 100 level, and the RSI stands flat around 54.

Chances of a stronger decline will surge on a break below 0.7295, with scope then to retest the recent multi-years lows near the 0.7200 level.

 

[Option_Banque]

Put Options Still Preferable For EURUSD As Bears Gain Strength

In the UK, inflation surged 0.1% in July 2015 compared to July 2014, but declined 0.2% monthly basis, against expectations of a 0.3% fall. The core reading yearly basis reached 1.2%, the highest in five months, a government report said yesterday.
At the same time, the UK released its PPI figures, still negative due to falling oil prices. The stronger-than-expected figures support the “sooner” rate hike MPC members have been talking about lately, making of the currency a more attractive investment, with the Pound outperforming its rivals all across the board.
US Housing Starts for July climbed to 1.206M, the highest level in almost eight years. Building permits came out at 1.119M, slightly below expected, but remain near multi-years highs, suggesting the US economy has started to pick pace in the second quarter of the year. The figures boosted the greenback that maintained a positive tone during most of the American afternoon.
The EUR/USD saw a limited advance at the beginning of the European session, but stalled short of the 1.1100 level, beginning a steady decline that ended at 1.1016, following US housing data. There was no clear catalyst behind the move, but there was neither beyond the latest advance, and the market is probably taking profits out of the table ahead of upcoming FOMC Minutes.
Technically, the pair entered in consolidative mode after reaching its low and the 1 hour chart shows that the price is now unable to advance above the 50% retracement of its latest bullish run around 1.1030, whilst the 20 SMA has extended its decline above it, and the technical indicators remain dip in the red, supporting additional declines.

In the 4 hours chart, the RSI indicator continues heading lower, despite being around 35, whilst the 20 SMA maintains a sharp bearish slope above the current level. Should the pair accelerate lower once again, a break below 1.1010 exposes the 1.0960 level in the short term, whilst sellers will maintain the lead as long as the price remains below the 1.1100 figure.

 

[Option_Banque]

Are You Ready To Buy USDJPY Put Options?

The USD/JPY pair finally left its range, breaking lower after the US Central Bank failed to confirm a rate hike for the upcoming September meeting.
Having been confined to a tight 40 pips range ever since the week started, the pair fell down to 123.68 after the news, and trades a few pips above it by the end of the day. The pair has been immune to the risk environment triggered by Chinese stocks that fell sharply lower for a second day in-a-row, but finally closed flat.

The gold and the Swissy however, benefited from Chinese's woes, both edging higher against its major rivals.

As for the USD/JPY the 1 hour chart shows that the price accelerated below its 100 and 200 SMAs, whilst the technical indicators are losing their bearish strength in extreme oversold levels, still far from suggesting an upward correction.

In the 4 hours chart, the price has extended below its 100 and 200 SMAs, whilst the technical indicators have also turned flat near oversold levels. Should the price extend its decline, the next bearish target comes at 123.30, a strong static support level that if broken, should lead to a continued decline during the upcoming days.

 

[Option_Banque]

Pound Struggles at 1.5700 Resistance Amid Weak Retail Sales

The GBP/USD pair remained capped by the 1.5700 figure for a second day in-a-row, having been as low as 1.5602 daily basis, following the release of the UK Retail Sales data.

In July, Britain’s retail sales rose 0.1%, below markets expectations of a 0.4% advance, up 4.2% on the year, slightly below the 4.4% forecast.

Nevertheless, the pair recovered the lost ground, ending the day right below the critical figure, and supporting additional advances, on a break above 1.5715, the immediate resistance.

Talking about the short term, scenario, the 1 hour chart shows that the price has bounced from a flat 20 SMA, whilst the technical indicators are aiming higher above their mid-lines, maintaining a tepid bullish slope.

In the 4 hours chart the price has managed to hold above a mild-bullish 20 SMA, whilst the Momentum indicator turned sharply higher from the 100 level and the RSI indicator slowly advances around 58, all of which suggests further gains are likely, up to the 1.5770 strong static resistance level.

 

[Option_Banque]

USD/JPY Continues Steep Losses Amid China’s Economic Slowdown

The USD/JPY pair lost 150 pips on Friday, closing at its lowest level since mid July. The Japanese yen was boosted by the ongoing risk aversion sentiment triggered by China’s economic slowdown, and fading expectations over a rate hike by the US Federal Reserve in September.
The pair extended downside movement on Monday, sliding down to less than 120.80 during the Asian session.
Additionally, US 10-year yields fell down to 2.05%, boosting the Japanese currency, while macroeconomic data in Japan, continues to be up beating.
The pair has broken below its 100 DMA now around 122.80 and a major resistance for the upcoming days, and the daily chart favors a continued decline towards the 200 DMA, currently at 120.80, as the technical indicators head almost vertically lower, now approaching oversold readings.

Intraday, the pair is extremely oversold, with the RSI indicator hardly losing its bearish momentum around 14. Despite the extreme oversold readings, the pair may well extend its decline, without much of an upward correction in between, particularly on a break below 121.80, last Friday’s low.

 

[Option_Banque]

Eur/usd skyrockets to the highest level since january

The EUR/USD pair surged to a daily high of 1.1713, before giving up half of its intraday gains, closing the day however, at levels not seen since January this year.
The 1 hour chart shows that pair retreated down to 1.1517 after reaching the mentioned high, struggling now a few pips above the 38.2% retracement of today’s run at 1.1580.
In the same chart, the technical indicators have corrected extreme overbought readings and stabilized well above their mid-lines, whilst the 20 SMA heads strongly higher, converging with the 61.8% retracement of the same rally around 1.1500.

In the 4 hours chart, the technical indicators are slowly beginning to ease, but remain in extreme overbought territory, with the RSI indicator around 90. The wild moves are far from over, and with the Asian opening, the market could run again into panic, making of the technical indicators, worthless intraday tools.
In the meantime, Panic selling took over markets after the Shanghai Composite added another 8.5% decline to last week losses. Stocks sunk worldwide, dragging the USD hundreds of pips lower at the beginning of the American session.
European stocks lost over 4%, whilst US indexes also closed sharply lower. Commodities also collapsed to multi-year lows. Despite the markets have stabilized by the end of the US session, the risk of another round of panic selling looms ahead of the Asian opening. China’s Central Bank may take additional measures, exacerbating the risk aversion sentiment. Additionally, chances of a September rate hike have decreased almost to zero with the latest markets’ developments, which will also weighed on stocks.

 

[Option_Banque]

EURUSD Still Looks Good For Call Options

The EUR/USD pair fell down to 1.1396 before recovering towards the 1.1500 level by the end of the day, as Wall Street reversed its intraday gains and closed the day 200 points down after having posted gains of nearly 450 points earlier in the day.
In short term, the pair seems to have found a short term bottom, as in the 1 hour chart, the technical indicators are recovering partially from near oversold levels, whilst the 100 SMA has advanced well above the 200 SMA, both below the current level, with the shortest offering a strong support around 1.1345.

In the 4 hours chart the price is recovering after a brief decline below its 20 SMA, whilst the technical indicators have erased their overbought readings, and now aim slightly higher, well above their mid-lines. Nevertheless, to confirm a stronger recovery, the pair needs to advance beyond 1.1500, the 61.8% retracement of Monday’s fall.
Meanwhile positive data came from Germany, with the final GDP figures for the second quarter of this year matched expectations and the previous review, increasing by 0.4% in the three months ending June and compared to the first quarter of the year, leaving the annual growth rate at 1.6%.
Additionally, the country released its IFO survey, which resulted above expectations in all of its readings. Expectations rose to 102.2 against expectations of 102.00, whilst the Business Climate surged to 108.3 vs. 107.7 expected.
Mid European morning, China’s central bank cut its benchmark lending rate for the fifth time in nine months and also lowered it RRR, quite an unusual movement, in another desperate attempt to control stocks, and prevent the economy from shrinking further.
US data resulted mixes, with sales of new homes up 5.4% in July, to 507,000 missing expectations of 520,000, whilst the Markit Services PMI resulted at 55.2 in August against the 56.0 expected, although Consumer confidence rebounded in August, printing 101.5 up from 91.0 in July.

 

[Option_Banque]

Cable Looks Good For Put Options

The British Pound plummeted to a fresh 2-week low against the greenback, as fears of a delay in a possible rate hike extended to the UK.
The GBP/USD lost over 200 pips daily basis, having been under pressure ever since the European opening, and with no clear catalyst behind the early decline, later supported by dollar’s demand.
The pair trades back around the base of these last 2-month range, which increases the potential of a mid-bearish continuation after the failed upward breakout, earlier this week.

In short term, the 1 hour chart shows that the technical indicators are starting to look exhausted towards the downside in extreme oversold levels, but remain far from suggesting an upward correction ahead, whilst the 20 SMA heads sharply lower well above the current price.
In the 4 hours chart, the Momentum indicator heads sharply lower , despite being in oversold territory, whilst the RSI indicator heads lower around 27.
Due to the sharp decline and the fact that the price is at a critical support level, the pair may see some consolidation, or even a shallow bounce, before setting another directional move, yet as long as the price remains below 1.5520, the risk remains towards the downside.