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Midday Market Outlook 4 Feb -

Feb, 04th 14:20

feb4(1)

Global Stocks surged on Thursday propelled by the strong breakdown in US Dollar. US Dollar faced one of its largest falls on Wednesday since early December. The sudden reversal in the US Dollar boosted the Oil price to climb higher which ultimately helped beleaguered global stocks initiate a strong rally on Thursday. The rationale behind such moves is the expectation for a continuation of easy monetary policy across the world, and a hidden expectation somewhere, that the FED may also hold off on interest rate increases in the immediate future, to support growth prospects in the global economy.

Chinese CSI300 rose by 1.23 percent and ended at 2984.76 on Thursday as CSI’s 271 members out of 294 members were up and only 21 members were down. ​​ Hong Kong Hang Seng index leaped by 1.01 percent and closed at 19183.09, Korean KOSPI climbed 1.35 percent and ended at 1926.26 and Australian S&P/ASX200 rose by 2.12 percent and ended at 4980.36. However , The Japanese Nikkei was down by 0.85 percent as a stronger Yen against Dollar disappointed investors.​​ 

European Stocks have also started in positive mode. The EURO Stoxx50 has climbed 0,53 percent, FTSE100 has climbed 0.69 percent , DAX has climbed 0.40 percent , CAC40 has climbed 0.20 percent and IBEX35 has climbed 0.28 percent so far.

US Dollar encountered one of its largest recent drops against the Euro on Wednesday, struck by the comparatively weaker Non-Manufacturing ​​ ISM report of January 2016 as the PMI registered a reading of 53.5 percent in January, 2.3 percentage points lower than the seasonally adjusted December reading of 55.8 percent. The Non-Manufacturing Business Activity Index decreased by 5.6 percent to 53.9 from the seasonally adjusted December reading of 59.5 percent. The New Orders Index decreased by 2.4 percent to 56.5 percent from the seasonally adjusted reading of 58.9 percent in December. The Employment Index decreased 4.2 percentage points to 52.1 percent from the seasonally adjusted December reading of 56.3 percent. The Prices Index decreased by 4.6 percent to 46.4 percent from the seasonally adjusted December reading of 51 percent. All of these data indicate a slowing down in the growth rate. The Euro  traded at $1.1114 level on late Wednesday , compared with $1.0917 late Tuesday .

​​ EURUSD

EURUSD rose by 1.52 percent on Wednesday, the highest since early December as the Dollar encountered a huge breakdown against all the major currencies. Currently the EURUSD has climbed by 0.50 percent in today's trading.

Fig: EURUSD Hourly Technical Chart

EURUSD broke out of the long consolidation range on Wednesday and drove higher swiftly. Today so far it has continued the strong rally. It has formed interim support near the broken resistance zone at 1.1068. The next significant resistance level is @1.1260. It is expected to have some retracement of the recent rally from 1.1260 level .The intraday bias remains bullish.

Trade Suggestion

Buy Digital Call​​ @1.1150​​ and Digital Put@1.1230.

GBPUSD

GBP rose by 1.12 percent against USD and breached the significant 1.4600 level on Wednesday. Today so far it has climbed 0.66 percent so far.

Fig: GBPUSD Hourly Technical Chart.

GBPUSD has been strongly bullish this week as It has climbed 2.76 percent this week after rebounding from 1.4148 last week. Currently it is trading inside the confluence zone – where the top of the trend channel and the horizontal resistance zone. A sustained move above 1.4600 would open up the door towards 1.4800.

Trade Suggestion

Buy Digital Call @ 1.4600 and Digital Put​​ @1.4760.

 

USDJPY

USDJPY​​ fell 1.45 percent on Wednesday, the largest fall since August,2015. Today it has dropped ​​ 0.50% so far.

 

Fig: USDJPY Hourly Technical Chart

 

USDJPY has started falling steeply from the starting of this week. It has fallen 3.24 percent in this week so far. Price crossed down below SMA50 & SMA200 on hourly, h4 and daily charts. Stochastic is also indicating strong bearish momentum. Currently USDJPY is trying to rebound from 117.03. The interim resistance is at 118.22. If price can beach above the 118.22 level, it might retest the 119.00 level. Conversely, ​​ a sustained move below 117.00 would open up the way towards 116.00.

 

Trade Suggestion

 

Buy Digital Put @117.00​​ and Digital Call​​ @116.20.

 

AUDUSD

AUD​​ ascended 1.82 percent on Wednesday after rebounding from 0.7001. It was the highest gain against the dollar since July,2015 . Today it has climbed 0.60 percent so far.

 

 

Fig: AUDUSD Hourly Technical Chart

 

AUDUSD has breached above 0.7200 level today after forming an interim support 0.7150. The next significant level is 0.7320 from where it is expected to see some significant retracement. The intraday bias remains strongly bullish.

 

Trade Suggestion

Buy​​ ​​ Digital Call @ 0.7200 and Digital Put​​ @0.7275.

 

Gold

XAUUSD ascended by 1.24 percent on Wednesday, as the USD weakened and commodities in general recorded a sharp rebound based on expectations of an easy global monetary policy, and renwed hopes for a rekindling of global growth rates. The safe haven flows in this uncertain environment are serving to support Gold And Silver. Today it has risen 0.39 percent so far.

Fig: XAUUSD Hourly Technical Chart

 

XAUUSD is currently at the top of a well established upward slopping channel. The interim support is at 1137.00. If XAUUSD can breach above the current channel, it might drive towards 1155 level. ​​ Conversely, if it ​​ gets rejection by the top of channel, it might retrace significantly against the current rally.

 

Trade Suggestion

 

Buy Digital Call @​​ 1148.50​​ and Digital Put​​ @1154.50.

 

Crude Oil

Crude Oil​​ surged ​​ strongly against weak Dollar on Wednesday .It rose about 9 percent yesterday. The sharp rebound from the sub-30 levels, coming against the backdrop of chatter in the markets about some internal efforts within the Oil producing countries(OPEC and non OPEC) to stabilise production levels ​​ and to coordinate price stablity in the Oil Market, have lent some support to The Oil market.

 

 

Fig: USOil Hourly Technical Chart

 

Crude Oil is currently struggling to break above the 32.80 level. It got rejected by the confluence zone of the top of descending diagonal and the resistance at 32.80 level. A strong rejection may ​​ initiate the resumption of previous selloff. Conversely, if it can break above 33.00 it would pave the way towards 34.20.

 

Trade Suggestion

 

Buy Digital Call @​​ 33.00​​ and Digital Put​​ @33.80.

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