AAFX TRADING

Daily Market Lookup

  • Asia stocks rose to a four-month high on Thursday after the Federal Reserve pledged to be patient with further interest rate hikes, signaling a potential end to its tightening cycle amid signs of slowing global growth. The dollar struggled near a three-week trough against its major peers and U.S. Treasury yields were significantly lower as investors reacted to the Fed's change in tone. The Fed on Wednesday held interest rates steady as expected, and also discarded its promises of "further gradual increases" in interest rates. The central bank said it would be "patient" before making any further moves amid a suddenly cloudy outlook for the U.S. economy due to global growth risks and impasses over trade and government budget negotiations. Late in December the Dow had sunk to its lowest level since September 2017, dogged by factors including worries over cooling economic growth and trade tensions, adding pressure on the Fed to reassess its tightening bias. The U.S. central bank also said on Wednesday that its balance sheet would remain larger than previously expected. However, while market expectations for Fed tightening may have waned significantly, some analysts suggested rate hikes still remained a near-term possibility. With the Fed decision out of the way, investors focused their attention on a pivotal round of high-level U.S.-China trade talks aimed at easing a months-long tariff war. The two-day talks which began in Washington on Wednesday are expected to be tense, with little indication so far that Beijing is willing to address core U.S. demands to fully protect American intellectual property rights and end policies that Washington has said force U.S. companies to transfer technology to Chinese firms. If the two sides cannot reach a deal soon, Washington has threatened to more than double tariffs on Chinese goods on March 2. The Chinese yuan rose on Thursday in Asia as traders digested the latest PMI data which rose slightly in January but still below the 50-mark that separates growth from contraction. The gain in the yuan came after the National Bureau of Statistics showed on Thursday that China’s January official Purchasing Managers' Index (PMI) rose to 49.5 from 49.4 in December. The number was better than the 49.3 expected by analysts. However, it also suggested activity in China’s manufacturing sector has shrunk for the second straight month. Meanwhile, the services PMI for January came in at 54.7, better than the 53.8 reported in the previous month. Traders remained cautious as they await the outcome of the highly-anticipated trade talks between high-level Chinese and U.S. officials that began on Wednesday, as the two sides try to reach a deal before a March 1 deadline that could usher in higher U.S. tariffs on Chinese goods. Meanwhile, the U.S. dollar index edged down 0.1% to 94.958 on Thursday after falling sharply against its rivals on the previous day as the Federal Reserve left interest rates unchanged and vowed to keep the brakes on further rate hikes. The central bank ditched its preference to continue with "gradual" rate hikes, saying it can hold off on monetary policy tightening following a slowdown in global growth and muted inflation pressures.
  • U.S. private payrolls increased solidly in January, pointing to sustained labor market strength despite a recent easing in consumer and business confidence that has suggested a loss of momentum in the economy. The strong hiring shown in the ADP National Employment Report on Wednesday also suggested there had been minimal impact on the labor market from the just-ended 35-day partial shutdown of the federal government. Other data showed contracts to buy existing homes tumbled to a more than 4-1/2-year low in December. Amid growing uncertainty over the economy’s outlook, the Federal Reserve on Wednesday kept benchmark U.S. interest rates steady and said it would be patient in lifting borrowing costs further this year. The ADP National Employment Report showed private payrolls increased by 213,000 in January after surging 263,000 in December. Economists polled by Reuters had forecast private payrolls advancing 178,000 in January. The ADP report, which is jointly developed with Moody’s Analytics, was published ahead of the government’s more comprehensive employment report for December scheduled for release on Friday. While the ADP report is not considered a reliable predictor of the private payrolls portion of the government’s employment report because of differences in methodology, it was in line with other market data, including weekly filings for unemployment benefits, that have suggested a healthy jobs market. According to a Reuters survey of economists, nonfarm payrolls likely increased by 165,000 jobs in January after jumping 312,000 in December. The unemployment rate is forecast unchanged at 3.9 percent The dollar fell against basket of currencies on the Fed’s dovish statement on interest rates, while U.S. Treasury prices rose. Stocks on Wall Street extended gains. In a separate report on Wednesday, the National Association of Realtors said its pending home sales index, based on contracts signed last month, dropped 2.2 percent to 99.0, the weakest reading since April 2014. The weak housing report added to surveys showing a plunge in consumer confidence in January and some regional Fed manufacturing surveys that have suggested a slowdown in economic activity in the fourth quarter and early in 2019. Economists believe U.S. economic growth cooled in the fourth quarter from the July-September period’s brisk 3.4 percent annualized rate. The advance fourth-quarter GDP report, which was scheduled for release on Wednesday, has been delayed as the government shutdown prevented the collection of source data by the Commerce Department’s Bureau of Economic Analysis and Census Bureau.
  • Oil prices extended gains on Thursday in Asia for the third day after the Energy Information Administration (EIA) weekly report showed crude stockpiles rose less than expected. London-traded Brent Oil Futures, the global oil benchmark, were also up 0.8% at $62.06. U.S. crude inventories rose 919,000 barrels for the week ended Jan. 25 while analysts expected an increase of 3.2 million barrels, the EIA said. The gain in prices also came after the EIA report showed a drop in Saudi crude supply to the U.S. A Bloomberg chart on weekly U.S. crude imports showed the latest intake from Saudi Arabia at 442,000 barrels, the lowest since 2010. Elsewhere, U.S. sanctions imposed on Venezuela’s state-oil firm PDVSA this week are also causing some supply disruptions and were cited as supportive for oil prices. Meanwhile, Chinese PMI received some focus today after the National Bureau of Statistics showed China’s factory activity shrank for the second straight month. The official PMI came in at 49.5 in January. The reading was slightly higher than the 49.4 in December, but still below the 50-mark that separates growth from contraction. Meanwhile, the services PMI for January came in at 54.7, better than the 53.8 reported in the previous month. The outcome of the ongoing Sino-U.S. trade talks that began on Wednesday is also expected to be an influence on the oil market later this week.

 

 
Intraday RESISTANCE LEVELS
31st January 2019 R1 R2 R3
GOLD-XAU 1,326-1,334 1,340 1,356
Silver-XAG 16.40-17.00 17.40 18.00
Crude Oil 54.80-55.50 56.00 56.50
EURO/USD 1.1500-1.1540 1.1570 1.1620
GBP/USD 1.3150-1.3200 1.3260 1.3290-1.3340
USD/JPY 109.10 109.50-109.80 110.00

Intraday SUPPORTS LEVELS
31st January 2019 S1 S2 S3
GOLD-XAU 1.316-1,309 1.296 1.289-1,282
Silver-XAG 16.00-15.60 15.40 15.10-14.90
Crude Oil 54.00 53.00-52.50 52.00
EURO/USD 1.1460-1.1420 1.1380 1.1340-1.1305
GBP/USD 1.3090 1.3050 1.3010-1.2940
USD/JPY 108.50-108.00 107.30 106.70

Intra-Day Strategy (31st January 2019)
GOLD-XAU Buy on Dips
Silver-XAG Neutral
Crude Oil Neutral
EUR/USD Neutral to Buy
GBP/USD Neutral to Sell
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Wednesday made its intraday high of US$1323.33/oz and low of US$1308.92/oz. Gold up by 0.612% at US$1319.21/oz.

Technicals in Focus:

In daily charts, prices are above 200DMA (1251) and breakage below will call for 1246-1236. MACD is above zero line and histograms are increasing trend and it will bring upward stance in the upcoming sessions. RSI is in overbought region and more upside 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: Buy on Dips

Based on the charts and explanations above; buy above 1316-1274 with risk below 1274, targeting 1320-1326 and 1334-1340. Sell below 1326-1356 keeping stop loss closing above 1350, targeting 1316-1309-1296 and 1289 and 1282-1274.

 
Intraday Support Levels
S1     1.316-1,309
S2     1.296
S3     1.289-1,282
Intraday Resistance Levels
R1     1,326-1,334
R2     1,340
R3     1,356

Technical Indicators

Name   Value Action
14DRSI  

73.265

Buy
20-DMA   1292.81 Buy
50-DMA  

1264.84

Buy
100-DMA   1238.41 Buy
200-DMA   1245.99 Sell
STOCH(5,3)   94.473 Sell
MACD(12,26,9)   97.170 Buy

Silver - XAG

AAFX TRADING

Silver on Wednesday made its intraday high of US$16.08/oz and low of US$15.80/oz. Silver settled down by 0.069% at US$16.04/oz.

Technicals in Focus:

On daily charts, silver is sustaining above200DMA (15.27), breakage below will lead to 14.30-13.60. 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 positive crossover to show upside move for the intraday trade.

Trading Strategy: Neutral

Based on the charts and explanations above, buy above 16.00-14.70 targeting 16.40-17.00 and 17.40-18.00; stop breakage below 14.70. Sell below 16.40-18.00 with stop loss above 18.00; targeting 16.00-15.70-15.40 and 15.10-14.80.

 
Intraday  Support Levels
S1     16.00-15.60
S2     15.40
S3     15.10-14.90

Intraday  Resistance Levels
R1     16.40-17.00
R2     17.40
R3     18.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   69.2505 Buy
20-DMA   15.57 Buy
50-DMA   15.03 Buy
100-DMA   14.72 Buy
200-DMA   15.26 Sell
STOCH(5,3)   89.342 Buy
MACD(12,26,9)   0.153 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Wednesday made an intra‐day high of US$54.98/bbl, intraday low of US$53.19/bbl and settled up by 1.724% to close at US$54.27/bbl.

Technicals in Focus:

On daily charts, oil is sustaining below its 50DMA i.e. 66.10 which is a resistance level and breakage above will call for 66.80-67.08. MACD is above zero line and histograms are in increasing mode will bring bearish stance in the upcoming sessions. The Stochastic Oscillator is in overbought 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 54.80-56.50 with stop loss at 56.50; targeting 54.00-53.00-52.50 and 51.70-51.00. Buy above 54.00-51.50 with risk daily closing below 51.50 and targeting 54.80-55.50 and 56.00-56.50.

 
Intraday Support Levels
S1     54.00
S2     53.00-52.50
S3     52.00

Intraday Resistance Levels
R1     54.80-55.50
R2     56.00
R3     56.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   52.075 Sell
20-DMA   51.97 Sell
50-DMA   50.72 Sell
100-DMA   59.24 Sell
200-DMA   63.84 Sell
STOCH(5,3)   60.927 Sell
MACD(12,26,9)   0.856 Buy

EUR/USD

AAFX TRADING

EUR/USD on Wednesday made an intraday low of US$1.1405/EUR, high of US$1.1500/EUR and settled the day up by 0.411% to close at US$1.1477/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.1475), which become immediate resistance level, break below will target 1.1560-1.1600. 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 sell.

Trading Strategy: Neutral to Buy

Buy above 1.1380-1.1215 with risk below 1.1215, targeting 1.1420-1.1460 and 1.1490-1.1520. Sell below 1.1460-1.1570 targeting 1.1420-1.1380-1.1345 and 1.1305-1.1265 with stop-loss at daily closing above 1.1570.

 
Intraday Support Levels
S1     1.1460-1.1420
S2     1.1380
S3     1.1340-1.1305

Intraday  Resistance Levels
R1     1.1500-1.1540
R2     1.1570
R3     1.1620

TECHNICAL INDICATORS
Name   Value Action
14DRSI   59.123 Buy
20-DMA   1.1424 Buy
50-DMA   1.1389 Sell
100-DMA   1.1445 Sell
200-DMA   1.1568 Sell
STOCH(5,3)   90.157 Buy
MACD(12,26,9)   0.0005 Buy

GBP/USD

AAFX TRADING

GBP/USD on Wednesday made an intra‐day low of US$1.3053/GBP, high of US$1.3144/GBP and settled the day up by 0.390% to close at US$1.3115/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.3096) 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 neutral territory and giving positive crossover to confirm bullish stance. MACD is above zero line but histograms are increasing lead to downward movement.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; sell below 1.3150-1.3340 with targets at 1.3100-1.3050 and 1.3010-1.2940-1.2850. Buy above 1.3090-1.2940 with targets 1.3150-1.3100-1.3050 and 1.3010-1.2940 with stop loss closing below 1.2940.

 
Intraday Support Levels
S1     1.3090
S2     1.3050
S3     1.3010-1.2940

Intraday Resistance Levels
R1     1.3150-1.3200
R2     1.3260
R3     1.3290-1.3340

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

62.894

Buy
20-DMA   1.2908 Sell
50-DMA   1.2781 Sell
100-DMA   1.2902 Sell
200-DMA   1.3056 Sell
STOCH(5,3)   63.972 Sell
MACD(12,26,9)   -0.0102 Sell

USD/JPY

AAFX TRADING

USD/JPY on Monday made intra‐day low of JPY108.79/USD and made an intraday high of JPY109.73/USD and settled the day down by 0.320% at JPY109.02/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 50DMA (111.82), which is major support on the daily chart. 14-D RSI is currently in overbought region and chances of downward are expected based on RSI. 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 buy as it has given positive crossover to confirm bullish stance.

Trading Strategy: Neutral to Sell

Sell below 109.50-111.05 with risk above 111.05 targeting 109.10-108.50 and 108.10-107.70-107.05. Long positions above 109.10-107.30 with targets of 109.50-109.80 and 110.20-111.00 with stop below 107.00.

 
Intraday Support Levels
S1     108.50-108.00
S2     107.30
S3     106.70

INTRADAY RESISTANCE LEVELS
R1     109.10
R2     109.50-109.80
R3     110.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   49.263 Buy
20-DMA   109.01 Sell
50-DMA   111.27 Sell
100-DMA   111.99 Buy
200-DMA   111.22 Buy
STOCH(9,6)   70.080 Buy
MACD(12,26,9)   -0.434 Sell

AAFX TRADING
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