AAFX TRADING

Daily Market Lookup

  • Asian shares edged higher on Tuesday, approaching record highs, while the yen stole the currency spotlight and jumped after the Bank of Japan’s slight reduction to its bond purchases reminded investors that it will eventually normalize policy. Japan’s Nikkei stock index added 0.5 percent, paring its gains after the yen surged. It earlier touched its highest levels since November 1991, catching up to the previous session’s gains as markets reopened after a holiday on Monday. Since it adopted the yield curve control policy in 2016, the BOJ has made similar tweaks to its JGB purchases, which are regarded as mainly technical moves. On Tuesday, it cut its JGB purchases of 10 to 25 years left to maturity and those of 25 to 40 years to maturity by 10 billion yen ($88.39 million) each, from its previous operations for those zones. While the central bank’s operational adjustments do not usually have an impact on foreign exchange markets, dealers said the timing of the move suggested some players had used it as an excuse to sell the dollar and the euro against the yen. Underpinning the dollar, investors bet on further U.S. interest rate hikes after Friday’s payrolls data did nothing to challenge the outlook for monetary policy tightening by the U.S. Federal Reserve. While job growth slowed more than expected, a pick-up in monthly wages pointed to labour market strength. But the dollar’s upward momentum was tempered as investors differed on the pace of tightening while U.S. inflation remains relatively cool. Atlanta Fed President Raphael Bostic, who is a voting member of the central bank’s policy board, said on Monday that only two increases might be needed in 2018, in light of weak price pressures. The euro languished on Tuesday after slipping from last week’s high as investors were cautious after a months-long rally, while the dollar firmed against the yen though a lack of catalysts tempered its momentum. Speculators’ net long position in the euro/dollar futures in Chicago reached a record high last week, data from U.S. financial watchdog showed on Friday, pointing to potential for profit-taking. While many Federal Reserve officials have said they expect three rate hikes this year, markets are not fully convinced as inflation remains tame despite very tight labor market conditions. Indeed, Atlanta Fed President Raphael Bostic, a voter on interest rate policy this year, said on Monday that the Fed may only need to raise interest rates two times in 2018 given weak price pressures. Such doubts have held the dollar index down near its lowest levels since 2015 during the past few months.
  • Gold prices fell slightly in Asia on Tuesday even as a weaker dollar offered some support and Japan wages data showed a surprise upside. Japan reported average cash earnings for November jumped 0.9%, well above the 0.6% expected and overtime pay soared 2.60% compared to a 0.60% rise seen. Overnight, gold prices eased from near-four-month highs amid dollar strength as investors remained optimistic on the pace of US monetary policy tightening despite mixed signals from Fed officials. Atlanta Fed President Raphael Bostic said Monday while he supported the Federal Reserve “slow removal” of monetary policy accommodation, the central bank may not need to raise rates three or four times per year. Bostic struck a more dovish tone than his San Francisco counterpart Fed Williams, who on Saturday said three rates remained appropriate for 2018 amid expectations that President Donald Trump’s tax reform plans would give the economy a boost. Despite the prospect of global monetary tightening from the Federal Reserve, Bank of England and Bank of Canada this year, BofA Merrill Lynch said it expects gold prices to rise to $1,350 an ounce by the third quarter of the year. The Bank of Canada could raise rates as soon as next week, Action Economics said, as a recent swathe of positive data on the labor market may force the central bank’s hand on monetary policy tightening. Nomura’s George Buckley – who correctly predicted that the Bank of England would hike interest rate in November said recently that there is room for more rate hikes, estimating the Bank of England would raise rates four times by the end of 2019 to curb inflation, which is running well above target.
  • U.S. oil prices hit their highest since 2015 again on Tuesday as speculators bet on further price rises amid OPEC-led production cuts and a dip in American drilling activity, though some warned the rally could run out of steam. Traders said prices were mainly being driven by speculative money being poured into crude futures on the notion of a tighter market following a year of production cuts led by the OPEC and Russia, which are set to last through 2018. A slight dip in the amount of rigs in the United States drilling for new oil was supporting WTI, traders said. The number of rigs drilling for oil fell by 5 to 742 in the week to Jan. 5, according to oil services firm Baker Hughes. Despite the recent bull run, which has lifted crude prices by more than 10 % since early December, some warn that markets are getting ahead of themselves. The U.S. rig-count remains significantly above the low of 316 in June, 2016, and U.S. crude output is expected to break through 10 mn bpd soon, hitting a level that only Russia and Saudi Arabia have achieved so far. In Asia, the world’s biggest oil consuming region, there were also signs that despite the cuts in crude production, fuel supplies remain ample. Enjoying good profit-margins in 2017, Asian refiners had cranked up processing to a record 23 mn bpd by last October.

 

 
Intraday RESISTANCE LEVELS
9th January 2018 R1 R2 R3
GOLD-XAU 1,320-1,326 1,334 1,340
Silver-XAG 17.10-17.50 18.08 18.60
Crude Oil 62.50-63.00 63.50 64.20
EURO/USD 1.1990 1.2095-1.2150 1.2230
GBP/USD 1.3550-1.3590 1.3650 1.3700-1.3750
USD/JPY 113.20 114.00 114.75-115.50

Intraday SUPPORTS LEVELS
9th January 2018 S1 S2 S3
GOLD-XAU 1,309 1,295-1,300 1,286
Silver-XAG 16.70 16.35-15.80 15.00
Crude Oil 61.90-61.00 60.50 59.90-59.00
EURO/USD 1.1950 1.1900-1.1850 1.1800
GBP/USD 1.3500-1.3450 1.3380 1.3320
USD/JPY 112.50 112.00-111.60 111.00

Intra-Day Strategy (9th January 2018)
GOLD-XAU Neutral
Silver-XAG Neutral
Crude Oil Neutral
EUR/USD Neutral to Sell
GBP/USD Neutral to Sell
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Monday made its intraday high of US$1322.03/oz and low of US$1314.64/oz. Gold was up by 0.003% at US$1320.30/oz.

Technicals in Focus:

In daily charts, prices are below 200DMA (1267) and breakage above will call for 1280-1290. MACD is below zero line and histograms are decreasing trend and it will bring upward stance in the upcoming sessions. RSI is in oversold region and more downside is expected before it gets stretched. Stochastic Oscillator is in overbought territory and giving positive crossover to confirm bullish stance for intraday trade.

Trading Strategy: Neutral

Based on the charts and explanations above; sell below 1320-1340 keeping stop loss closing above 1340 and targeting 1309-1300-1294 and 1286-1280. Buy above 1309-1280 with risk below 1280, targeting 1320-1326 and 1334-1340.

 
Intraday Support Levels
S1     1,309
S2     1,295-1,300
S3     1,286
Intraday Resistance Levels
R1     1,320-1,326
R2     1,334
R3     1,340

Technical Indicators

Name   Value Action
14DRSI  

70.286

Buy
20-DMA   1279.75 Sell
50-DMA  

1279.75

Sell
100-DMA   1288.62 Sell
200-DMA   1272.47 Buy
STOCH(5,3)   75.236 Buy
MACD(12,26,9)   13.427 Buy

Silver - XAG

AAFX TRADING

Silver on Monday made its intraday high of US$17.23/oz and low of US$17.01/oz. Silver settled down by 0.581% at US$17.10/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 200DMA (17.16), breakage below will lead to 16.70-16.35. MACD is above zero line and histograms are increasing trend and it will bring bullish stance in the upcoming sessions. RSI is in oversold region, indicating buy signal for now. The Stochastic Oscillator is in overbought region and giving negative crossover to show downside move for the intraday trade.

Trading Strategy: Neutral

Based on the charts and explanations above, buy above 16.70-14.60 targeting 17.10-17.50 and 18.00-18.30-18.60; stop breakage below 14.60. Sell below 17.10-18.00 with stop loss above 18.00; targeting 16.70-16.35-15.80-15.00.

 
Intraday  Support Levels
S1     16.70
S2     16.35-15.80
S3     15.00

Intraday  Resistance Levels
R1     17.10-17.50
R2     18.08
R3     18.60

TECHNICAL INDICATORS
Name   Value Action
14DRSI   63.810 Buy
20-DMA   16.50 Sell
50-DMA   16.66 Sell
100-DMA   16.92 Sell
200-DMA   16.93 Sell
STOCH(5,3)   65.880 Sell
MACD(12,26,9)   0.194 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Monday made an intra‐day high of US$61.95/bbl, intraday low of US$61.31/bbl and settled up by 0.519% to close at US$61.90/bbl.

Technicals in Focus:

On daily charts, oil is sustaining below its 200DMA i.e. 49.60 which is a major resistance and breakage above will call for 50.30-51.00. MACD is above zero line and histograms are in increasing mode will bring bearish stance in the upcoming sessions. The Stochastic Oscillator is approaching oversold region and giving negative crossover for confirmation of bearish stance; while the RSI is in oversold region and more downside can be expected.

Trading Strategy: Neutral

Based on the charts and explanations above; sell below 61.90-64.50 with stop loss at 64.50; targeting and 61.00-60.50 and 59.90-59.00. Buy above 61.00-59.00 with risk daily closing below 59.00 and targeting 61.90-62.50-63.00 and 63.65-64.50.

 
Intraday Support Levels
S1     61.90-61.00
S2     60.50
S3     59.90-59.00

Intraday Resistance Levels
R1     62.50-63.00
R2     63.50
R3     64.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   75.425 Sell
20-DMA   59.24 Buy
50-DMA   57.70 Buy
100-DMA   53.84 Buy
200-DMA   50.92 Buy
STOCH(5,3)   80.444 Sell
MACD(12,26,9)   1.369 Buy

EUR/USD

AAFX TRADING

EUR/USD on Monday made an intraday low of US$1.1.1955/EUR, high of US$1.2051/EUR and settled the day down by 0.498% to close at US$1.1966/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1700), which become immediate resistance level, break above will target 1.1750-1.1800. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in oversold territory and giving negative crossovers to signal for bearish outlook for intraday. 14D RSI is currently approaching oversold region and giving wards directions to consider buy.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; sell below 1.1990-1.12300 targeting 1.1950-1.1900 and 1.1850-1.1790 with stop-loss at daily closing above 1.2300. Buy above 1.1950-1.1800 with risk below 1.1700 targeting 1.2090-1.2150 and 1.2230-1.2300.

 
Intraday Support Levels
S1     1.1950
S2     1.1900-1.1850
S3     1.1800

Intraday  Resistance Levels
R1     1.1990
R2     1.2095-1.2150
R3     1.2230

TECHNICAL INDICATORS
Name   Value Action
14DRSI   55.542 Buy
20-DMA   1.1893 Buy
50-DMA   1.1808 Sell
100-DMA   1.1825 Sell
200-DMA   1.1527 Buy
STOCH(5,3)   25.207 Sell
MACD(12,26,9)   0.0055 Buy

GBP/USD

AAFX TRADING

GBP/USD on Monday made an intra‐day low of US$1.3522/GBP, high of US$1.3584/GBP and settled the day up by 0.125% to close at US$1.3566/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.3263) is become major support level. 14-D RSI is currently in neutral region and direction is difficult to predict on RSI bases. The Stochastic Oscillator is in oversold territory and giving negative crossover to confirm bearish stance. MACD is below zero line and histograms are decreasing lead to downward movement.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; short positions below 1.3550-1.3750 with targets at 1.3500-1.3450-1.3400 and 1.3350-1.3300. Buy above 1.3500-1.3320 with stop loss closing below 1.3300 targeting 1.3550-1.3590 and 1.3650-1.3750.

 
Intraday Support Levels
S1     1.3500-1.3450
S2     1.3380
S3     1.3320

Intraday Resistance Levels
R1     1.3550-1.3590
R2     1.3650
R3     1.3700-1.3750

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

60.767

Buy
20-DMA   1.3428 Sell
50-DMA   1.3329 Sell
100-DMA   1.3256 Buy
200-DMA   1.3060 Buy
STOCH(5,3)   68.174 Sell
MACD(12,26,9)   0.0058 Buy

USD/JPY

AAFX TRADING

USD/JPY on Monday made intra‐day low of JPY112.87/USD and made an intraday high of JPY113.38/USD and settled the day down by 0.044% at JPY113.08/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (111.61), which is major support on the daily chart. 14-D RSI is currently in neutral region and direction is difficult to predict on RSI bases MACD is above zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is approaching overbought territory and signaling to sell as it has given negative crossover to confirm bearish stance.

Trading Strategy: Neutral to Sell

Sell below 113.20-115.50 with risk above 115.50 targeting 112.50-112.00 and 111.60-111.00. Long positions above 112.50-111.00 with targets of 113.20-114.00 and 114.75-115.50 with stop below 110.00.

 
Intraday Support Levels
S1     112.50
S2     112.00-111.60
S3     111.00

INTRADAY RESISTANCE LEVELS
R1     113.20
R2     114.00
R3     114.75-115.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   48.232 Buy
20-DMA   112.92 Buy
50-DMA   112.86 Buy
100-DMA   112.12 Buy
200-DMA   111.67 Buy
STOCH(9,6)   67.307 Buy
MACD(12,26,9)   0.026 Sell

AAFX TRADING
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