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  • The British pound bounced on Wednesday in the wake of a parliamentary vote opening the door for another Brexit delay, while the dollar drifted lower after weak manufacturing data stoked wagers on aggressive U.S. policy easing. He said the rise was driven by British lawmakers voting to defy Prime Minister Boris Johnson to put a proposal delaying Britain's exit from the European Union beyond October on parliament's agenda on Wednesday. On Tuesday, sterling dropped under $1.20 and hit its lowest since a flash crash in October 2016 and the outlook is still pretty cloudy. Johnson has said he will now push for a snap election, which would add yet another major source of uncertainty. The yen weakened slightly to 106.11 per dollar after a Bank of Japan board member said the central bank must pre-emptively ease monetary policy to fend off risks to the economy. The dollar's pullback was prompted by manufacturing activity in the world's biggest economy contracting for the first time in three years last month, according to data from the Institute for Supply Management. That knocked the wind out of a previously rising greenback and rallied the bond market as investors increased bets on a couple of Federal Reserve rate cuts before Christmas. Sterling gained in early London trading on Wednesday, as investors gave a cautious welcome to British lawmaker’s success in seizing control of parliamentary time to try and block a no-deal Brexit. Lawmakers who defeated Prime Minister Boris Johnson's government late on Tuesday are expected to introduce a bill in parliament on Wednesday seeking to stop Britain from leaving the European Union on Oct. 31 without transitional arrangements.
  • U.S. Treasury yields fell on Tuesday, with the benchmark 10-year yield hitting its lowest since July 2016, after U.S. manufacturing data showed the first contraction since 2016 on worries about a weakening global economy and U.S.-China trade tensions. The Institute for Supply Management (ISM) said its index of national factory activity decreased in August to 49.1, the lowest since January 2016. A reading below 50 indicates contraction in manufacturing, which accounts for about 12% of the U.S. economy. Last month marked the first time since August 2016 that the index broke below the 50 threshold. Concerns about the economy, which is in its longest expansion ever, were also exacerbated by other data on Tuesday showing construction spending barely rising in July. The economy’s waning fortunes have been blamed on the White House’s year-long trade war with China. President Donald Trump said on Tuesday trade talks with China were going well, but he warned that he would be “tougher” if the discussions dragged on past the 2020 U.S. election and he won a second term. The European Central Bank will cut its deposit rate next week and announce a restart of its asset purchase program, but over 80% of economists polled by Reuters were skeptical about the bank’s ability to influence inflation over the medium term. Less than a year ago, the ECB shuttered its 2.6 trillion euro quantitative easing program and gave guidance it would raise interest rates by the end of this year. But the ECB has changed course, along with many of its peers. The U.S.-China trade war has slowed global growth, and now the euro zone’s biggest economy, Germany, appears headed for recession. The Aug. 29-Sept. 3 poll showed nearly 70 economists were expecting the ECB to cut its deposit rate at its Sept. 12 meeting, with the vast majority predicting a 10 basis point reduction to -0.5%. Nearly a quarter forecast a 20 basis point cut. Euro zone money markets give a 60% chance of a 20 basis point cut in the deposit rate from minus 0.4%. And nearly 90% of respondents also expected the ECB to announce the restarting of its money printing presses, with monthly purchases of 30 billion euros from October. While more than three-quarters of economists said now is the right time for the ECB to roll out a stimulus package, over 80% of respondents said they were not confident the central bank could control inflation. That came after last week’s flash reading of 1% for August headline inflation — the same as in July and the lowest since late 2016. Even with a host of ECB stimulus measures now widely expected, a majority of economists in the latest poll downgraded their own inflation outlooks for next year — with the consensus for 2020 the lowest since polling began in April last year. A majority of respondents either lowered their annual average forecasts for growth or kept them unchanged from the previous poll. The poll median forecast the ECB to cut its deposit rate again to -0.6% next quarter and then keep it on hold through to at least the end of 2020.
  • Oil prices recovered slightly thanks to robust activity in China. A private survey showed that China's services sector expanded at the fastest pace in three months in August. As new orders increased, hiring increased at the highest rate in a year. The data from the largest oil importer in the world helped shore up oil prices. The slight increases on Wednesday followed a drop to close to a one-month low on Tuesday that was due to a gloomy outlook for the global economy. On Wednesday, the Institute of Supply Management released its purchasing managers index for August, which came in at 49.1, indicating contraction. It was the first contraction in three years. Euro zone manufacturing activity in August also contracted, making it seven months of contraction in a row. The ever-escalating U.S.-China trade war also dampened investor sentiment, with both sides implementing new tariffs over the weekend. Data on U.S. inventory levels has been delayed this week due to the U.S. Labor Day holiday on Monday, but U.S. crude oil stockpiles likely declined for a third straight week, a preliminary Reuters poll indicated. On the supply side, Venezuela's oil exports fell in August to their lowest level in 2019 after sanctions from the U.S. OPEC’s oil exports reached a four-month high. A Reuters survey placed the total August production estimates for OPEC at 29.61 million barrels per day (bpd). Bloomberg puts it as 29.99 million bpd.

 

 
Intraday RESISTANCE LEVELS
5th September 2019 R1 R2 R3
GOLD-XAU 1,550 1,555-1,562 1,570
Silver-XAG 19.50 20.00-20.50 20.90
Crude Oil 54.50-55.40 56.05 56.50-57.40
EURO/USD 1.1030-1.1050 1.1070 1.1100-1.1150
GBP/USD 1.2190-1.2250 1.2310 1.2350-1.2400
USD/JPY 106.50 107.00 107.60-108.20

Intraday SUPPORTS LEVELS
5th September 2019 S1 S2 S3
GOLD-XAU 1,539-1,532 1,516 1,509-1,500
Silver-XAG 18.90-18.60 18.10 17.90-17.50
Crude Oil 54.00-53.60 53.00 52.50-51.40
EURO/USD 1.0940-1.0910 1.0860 1.0815
GBP/USD 1.2100-1.2065 1.2010 1.1980-1.1900
USD/JPY 106.10-105.60 105.00 104.60-104.00

Intra-Day Strategy (5th September 2019)
GOLD-XAU Buy on Dips
Silver-XAG Buy on Dips
Crude Oil Neutral
EUR/USD Neutral to Buy
GBP/USD Neutral to Sell
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Tuesday made its intraday high of US$1549.66/oz and low of US$1521.60/oz. Gold up by 1.199% at US$1547.47/oz.

Technicals in Focus:

In daily charts, prices are above 20DMA (1506) and breakage below will call for 1400. MACD is above zero line and histograms are decreasing trend and it will bring downward 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 negative crossover to confirm bearish stance for intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above; buy above 1532-1490 with risk below 1490, targeting 1550-1555 and 1562-1570-1578. Sell below 1550-1570 keeping stop loss closing above 1570, targeting 1539-1532-1516 and 1509-1500-1489.

 
Intraday Support Levels
S1     1,539-1,532
S2     1,516
S3     1,509-1,500
Intraday Resistance Levels
R1     1,550
R2     1,555-1,562
R3     1,570

Technical Indicators

Name   Value Action
14DRSI  

65.734

Buy
20-DMA   1518.38 Buy
50-DMA  

1461.21

Buy
100-DMA   1385.00 Buy
200-DMA   1336.20 Buy
STOCH(5,3)   68.519 Buy
MACD(12,26,9)   23.325 Buy

Silver - XAG

AAFX TRADING

Silver on Tuesday made its intraday high of US$19.27/oz and low of US$18.32/oz. Silver settled up by 4.19% at US$19.24/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 50DMA (15.70), breakage below will lead to 15.20. MACD is above zero line and histograms are increasing trend and it will bring bullish stance in the upcoming sessions. RSI is in overbought 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: Buy on Dips

Based on the charts and explanations above, buy above 18.90-17.50 targeting 19.50-20.00-20.50 and 20.90-21.40; stop breakage below 17.50. Sell below 19.50-20.50 with stop loss above 20.50; targeting 18.90-18.50-17.90 and 17.50-16.80.

 
Intraday  Support Levels
S1     18.90-18.60
S2     18.10
S3     17.90-17.50

Intraday  Resistance Levels
R1     19.50
R2     20.00-20.50
R3     20.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   83.523 Buy
20-DMA   17.63 Sell
50-DMA   16.56 Buy
100-DMA   15.68 Buy
200-DMA   15.47 Buy
STOCH(5,3)   88.246 Buy
MACD(12,26,9)   0.358 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Tuesday made an intra‐day high of US$54.81/bbl, intraday low of US$52.73/bbl and settled down by 1.54% to close at US$53.78/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 100DMA i.e. 55.88 which is a resistance level and breakage above will call for 59.60. MACD is above zero line and histograms are in decreasing mode will bring bearish stance in the upcoming sessions. The Stochastic Oscillator is in 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

On daily charts, oil is sustaining above its 100DMA i.e. 55.88 which is a resistance level and breakage above will call for 59.60. MACD is above zero line and histograms are in decreasing mode will bring bearish stance in the upcoming sessions. The Stochastic Oscillator is in oversold region and giving negative crossover for confirmation of bearish stance; while the RSI is in oversold region and more downside can be expected.

 
Intraday Support Levels
S1     54.00-53.60
S2     53.00
S3     52.50-51.40

Intraday Resistance Levels
R1     54.50-55.40
R2     56.05
R3     56.50-57.40

TECHNICAL INDICATORS
Name   Value Action
14DRSI   47.377 Sell
20-DMA   54.82 Buy
50-DMA   56.41 Buy
100-DMA   57.88 Sell
200-DMA   56.17 Buy
STOCH(5,3)   64.130 Buy
MACD(12,26,9)   -0.245 Sell

EUR/USD

AAFX TRADING

EUR/USD on Tuesday made an intraday low of US$1.0925/EUR, high of US$1.0978/EUR and settled the day up by 0.0501% to close at US$1.0972/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1293), which become immediate resistance level, break above will target 1.1320-1.1350. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in overbought territory and giving negative crossovers to signal for bearish outlook for intraday. 14D RSI is currently in neutral region and giving no directions to consider.

Trading Strategy: Neutral to Buy

Buy above 1.0960-1.0815 with risk below 1.0815, targeting 1.1030-1.1050-1.1070 and 1.1160-1.1200. Sell below 1.1010-1.1150 targeting 1.0960-1.0910 and 1.0860-1.0815 with stop-loss at daily closing above 1.1150.

 
Intraday Support Levels
S1     1.0940-1.0910
S2     1.0860
S3     1.0815

Intraday  Resistance Levels
R1     1.1030-1.1050
R2     1.1070
R3     1.1100-1.1150

TECHNICAL INDICATORS
Name   Value Action
14DRSI   32.413 Buy
20-DMA   1.1132 Sell
50-DMA   1.1180 Sell
100-DMA   1.1199 Sell
200-DMA   1.1272 Sell
STOCH(5,3)   12.958 Sell
MACD(12,26,9)   -0.003 Buy

GBP/USD

AAFX TRADING

GBP/USD on Tuesday made an intra‐day low of US$1.1957/GBP, high of US$1.2104/GBP and settled the day up by 0.141% to close at US$1.2078/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 200DMA (1.2960) 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 positive crossover to confirm bearish 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 1.2165-1.2250 with targets at 1.2100-1.2065-1.2010 and 1.1980-1.1900-1.1850 stop-loss should be below 1.2310. Buy above 1.2100-1.1800 with targets 1.2190-1.2250-1.2300 and 1.2350-1.2400 with stop loss closing below 1.1800.

 
Intraday Support Levels
S1     1.2100-1.2065
S2     1.2010
S3     1.1980-1.1900

Intraday Resistance Levels
R1     1.2190-1.2250
R2     1.2310
R3     1.2350-1.2400

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

44.034

Buy
20-DMA   1.2140 Sell
50-DMA   1.2310 Sell
100-DMA   1.2554 Sell
200-DMA   1.2751 Sell
STOCH(5,3)   35.175 Buy
MACD(12,26,9)   -0.0004 Sell

USD/JPY

AAFX TRADING

USD/JPY on Monday made intra‐day low of JPY105.73/USD and made an intraday high of JPY106.37/USD and settled the day down by 0.250% at JPY105.91/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 50DMA (107.84), which is initial 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 in oversold territory and signaling to sell as it has given negative crossover to confirm bearish stance.

Trading Strategy: Neutral to Sell

Sell below 106.50-108.20 with risk above 108.20 targeting 106.10-105.80-105.00 and 104.50-104.00. Long positions above 106.10-104.00 with targets of 106.50-107.00 and 107.60-108.00-109.05 with stop below 106.00.

 
Intraday Support Levels
S1     106.10-105.60
S2     105.00
S3     104.60-104.00

INTRADAY RESISTANCE LEVELS
R1     106.50
R2     107.00
R3     107.60-108.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   45.360 Buy
20-DMA   106.13 Sell
50-DMA   107.29 Sell
100-DMA   108.63 Buy
200-DMA   109.78 Sell
STOCH(9,6)   66.253 Buy
MACD(12,26,9)   -0.412 Buy

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