AAFX TRADING

Daily Market Lookup

  • A rout in global equities deepened in Asia on Tuesday as inflation worries gripped financial markets, sending U.S. stock futures sinking further into the red after Wall Street suffered its biggest decline since 2011. S&P mini futures fell as much as 3.0 percent to four-month lows, extending their losses from the record peak hit just over a week ago to 12 percent, abruptly ending their smooth bull run of recent years. They last stood down 1.1 percent. Before Monday’s fall, the index had not seen a pullback of more than 5 percent for more than 400 sessions, which analysts said was the longest such streak in history. The trigger for the sell-off was a sharp rise in U.S. bond yields following Friday’s data that showed U.S. wages increasing at the fastest pace since 2009, raising the alarm about higher inflation and with it potentially higher interest rates. That could be painful for markets that have been propped up by central banks’ stimulus for many years. Some analysts also say markets tend to get edgy when the U.S. Federal Reserve has a new leadership. The new Fed chief Jerome Powell, who succeeded Janet Yellen this month, is expected to continue Yellen’s stance of gradual tightening. Still, some investors regard a change in the Fed leadership as a source of policy uncertainty. Fed fund futures are now pricing in only two rate hikes this year, a sea change from only a few days ago when they priced in about 80 percent chance of three increases with the market even rife with talk of four hikes. Keen to avoid further risk, investors are closing their positions in other assets, including the currency market where a popular strategy has been to sell the dollar against the euro and other currencies seen as benefiting from higher interest rates in the future
  • Gold prices gained in Asia on Tuesday as safe-have demand for the precious metal came to the fore following a rout in US stocks that carried over into the region and sent Tokyo down as much as 5%, Overnight, gold prices remained under pressure as the dollar moved off lows after services data topped economists’ forecasts reaffirming investor expectation that bullish economic growth would strengthen the Federal Reserve’s case to raise rates more aggressively. ISM non-manufacturing data for January showed an uptick to 59.9, beating expectations of 56.5. In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to interest-bearing assets such as bonds. Gold suffered its biggest weekly loss since December last week as data showed traders appear wary of increasing their bullish bets on gold. Speculative net long position in gold fell by about 7,000 contracts to a net long 207,300 contracts, according to the most recent COT report. It was the first decline in net long positions in four weeks. Bullish ISM services data, meanwhile, provided markets with a brief period of respite before the selloff resumed in earnest. ISM nonmanufacturing data for January showed an uptick to 59.9, beating expectations of 56.5. Analysts said the strong ISM reading was indicative of a strong economic activity, which could strengthen further, should tax-reform measures lead to a solid rise in consumption.
  • Oil prices dropped by more than 1 percent on Tuesday, extending falls from the previous session as global financial markets tumbled lower in the wake of one of the biggest intra-day falls ever registered on Wall Street. Financial markets went into a tailspin on Monday after a sharp rise in U.S. bond yields that raised alarms over rising inflation and potentially higher interest rates The correction in oil is also being driven by fundamentals, traders said. Despite the OPEC and Russia cutting production in order to tighten the market, crude remains in ample supply. That is largely due to soaring U.S. shale oil production, which has jumped by almost 18 percent since mid-2016 to 10 million bpd, surpassing top exporter Saudi Arabia. Only Russia produces more, averaging 10.98 million bpd in 2017 And U.S. oil output will likely rise further The amount of rigs drilling for oil rose to 765 by late January, more than double the 316 that were in operation during 2016’s production lull. There is also a seasonal downturn to demand, as many refineries shut for maintenance at the end to the peak-consumption winter season in the northern hemisphere. The largest U.S. refinery, Motiva Enterprises’ 603,000-bpd Port Arthur facility in Texas, began a planned one-month overhaul on Monday. Despite this, overall oil demand remains healthy, with U.S. bank Goldman Sachs estimating 2018 growth of 1.8 million bpd, with 40 percent of this coming from China and India alone.

 

 
Intraday RESISTANCE LEVELS
6th February 2018 R1 R2 R3
GOLD-XAU 1,350 1,358 1,366-1,375
Silver-XAG 17.00 17.70-18.20 18.60
Crude Oil 64.10 64.85 65.30-66.00
EURO/USD 1.2450 1.2525 1.2590-1.2650
GBP/USD 1.4000-1.4050 1.4100 1.4200-1.4260
USD/JPY 110.10 110.50 111.00-111.60

Intraday SUPPORTS LEVELS
6th February 2018 S1 S2 S3
GOLD-XAU 1,342 1,331 1,326-1,320
Silver-XAG 16.70 16.40-16.00 15.60
Crude Oil 62.80-62.20 61.50 61.00
EURO/USD 1.2370-1.2290 1.2200 1.2160
GBP/USD 1.3920 1.3860-1.3800 1.3730
USD/JPY 109.00 108.45-107.90 107.30

Intra-Day Strategy (6th February 2018)
GOLD-XAU Sell on Strength
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$1341.49/oz and low of US$1328.90/oz. Gold was up by 0.572% at US$1339.41/oz.

Technicals in Focus:

In daily charts, prices are below 20DMA (1329) 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 negative crossover to confirm bearish stance for intraday trade.

Trading Strategy: Sell on Strength

Based on the charts and explanations above; sell below 1355-1375 keeping stop loss closing above 1375 and targeting 1342-1336 and 1326-1318. Buy above 1358-1326 with risk below 1326, targeting 1355-1366-1375 and 1382-1390.

 
Intraday Support Levels
S1     1,342
S2     1,331
S3     1,326-1,320
Intraday Resistance Levels
R1     1,350
R2     1,358
R3     1,366-1,375

Technical Indicators

Name   Value Action
14DRSI  

63.122

Buy
20-DMA   1336.16 Buy
50-DMA  

1300.95

Buy
100-DMA   1293.10 Buy
200-DMA   1278.65 Buy
STOCH(5,3)   55.627 Buy
MACD(12,26,9)   13.068 Buy

Silver - XAG

AAFX TRADING

Silver on Monday made its intraday high of US$16.89/oz and low of US$16.54/oz. Silver settled up by 0.602% at US$16.70/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 neutral 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 16.70-15.60 targeting 17.00-17.75-18.20 and 18.60-18.95; stop breakage below 15.60. Sell below 17.00-18.60 with stop loss above 18.60; targeting 16.70-16.40 and 16.00-15.60.

 
Intraday  Support Levels
S1     16.70
S2     16.40-16.00
S3     15.60

Intraday  Resistance Levels
R1     17.00
R2     17.70-18.20
R3     18.60

TECHNICAL INDICATORS
Name   Value Action
14DRSI   48.002 Buy
20-DMA   17.08 Sell
50-DMA   16.69 Sell
100-DMA   16.83 Sell
200-DMA   16.83 Sell
STOCH(5,3)   22.141 Buy
MACD(12,26,9)   0.139 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Monday made an intra‐day high of US$65.38/bbl, intraday low of US$63.41/bbl and settled down by 2.535% to close at US$63.43/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 in neutral region and giving positive crossover for confirmation of bullish 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 64.10-66.00 with stop loss at 66.00; targeting 62.80-62.20 and 61.50-61.00. Buy above 62.80-61.00 with risk daily closing below 61.00 and targeting 64.10-64.85 and 65.30-66.00.

 
Intraday Support Levels
S1     62.80-62.20
S2     61.50
S3     61.00

Intraday Resistance Levels
R1     64.10
R2     64.85
R3     65.30-66.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   50.715 Sell
20-DMA   64.45 Buy
50-DMA   60.98 Buy
100-DMA   57.16 Buy
200-DMA   52.26 Buy
STOCH(5,3)   19.217 Sell
MACD(12,26,9)   0.967 Sell

EUR/USD

AAFX TRADING

EUR/USD on Monday made an intraday low of US$1.2361/EUR, high of US$1.2474/EUR and settled the day down by 0.530% to close at US$1.2366/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 neutral 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 1.2500-1.2725 targeting 1.2400-1.2360-1.2290 and 1.2200-1.2160 with stop-loss at daily closing above 1.2725. Buy above 1.2400-1.2160 with risk below 1.2140 targeting 1.2500-1.2590 and 1.2650-1.2725.

 
Intraday Support Levels
S1     1.2370-1.2290
S2     1.2200
S3     1.2160

Intraday  Resistance Levels
R1     1.2450
R2     1.2525
R3     1.2590-1.2650

TECHNICAL INDICATORS
Name   Value Action
14DRSI   60.545 Buy
20-DMA   1.2300 Buy
50-DMA   1.2045 Buy
100-DMA   1.1904 Buy
200-DMA   1.1685 Buy
STOCH(5,3)   31.844 Buy
MACD(12,26,9)   0.0114 Buy

GBP/USD

AAFX TRADING

GBP/USD on Monday made an intra‐day low of US$1.3953/GBP, high of US$1.4149/GBP and settled the day up by 1.042% to close at US$1.3954/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.3431) 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 overbought 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 1.4000-1.4260 with targets at 1.3920-1.3860 and 1.3800-1.3730. Buy above 1.3920-1.3730 with stop loss closing below 1.3700 targeting 1.4000-1.4050-1.4100 and 1.4200-1.4260.

 
Intraday Support Levels
S1     1.3920
S2     1.3860-1.3800
S3     1.3730

Intraday Resistance Levels
R1     1.4000-1.4050
R2     1.4100
R3     1.4200-1.4260

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

54.675

Buy
20-DMA   1.3957 Sell
50-DMA   1.3642 Sell
100-DMA   1.3446 Buy
200-DMA   1.3197 Buy
STOCH(5,3)   17.286 Sell
MACD(12,26,9)   0.0141 Sell

USD/JPY

AAFX TRADING

USD/JPY on Monday made intra‐day low of JPY108.98/USD and made an intraday high of JPY110.28/USD and settled the day down by 1.025% at JPY109.05/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (111.69), 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 110.10-111.60 with risk above 111.60 targeting 109.20-108.45-107.90 and 107.30-106.50. Long positions above 109.20-106.50 with targets of 110.10-110.50 and 111.00-111.60 with stop below 107.30.

 
Intraday Support Levels
S1     109.00
S2     108.45-107.90
S3     107.30

INTRADAY RESISTANCE LEVELS
R1     110.10
R2     110.50
R3     111.00-111.60

TECHNICAL INDICATORS
Name   Value Action
14DRSI   38.522 Buy
20-DMA   110.03 Sell
50-DMA   111.64 Sell
100-DMA   112.22 Sell
200-DMA   111.67 Sell
STOCH(9,6)   50.250 Buy
MACD(12,26,9)   -0.786 Sell

AAFX TRADING
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