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Daily Market Lookup

  • The safe-haven yen touched a three-month high on Monday and gold jumped as investors fretted that the killing of Iran’s most prominent military commander by the United States could trigger a broader Middle East conflict. U.S. President Donald Trump warned of a “major retaliation” if Iran hit back, while Iran’s replacement commander vowed to expel the United States from the region On Sunday, Iran further distanced itself from the 2015 nuclear agreement with world powers, which the United States witrhdrew from in 2018, saying it would continue to cooperate with the U.N. nuclear watchdog but would respect no limits to its uranium enrichment work. It handed back most of those gains later though, even as gold gained and stocks slid. The moves extended a flight to safety that began on Friday, after Iranian Major-General Qassem Soleimani was killed on Friday in a U.S. drone strike on his convoy at Baghdad airport. The attack took U.S.-Iranian hostilities into uncharted territory, stoking fears of a major conflagration. U.S. Secretary of State Mike Pompeo said Washington would target any Iranian decision-makers it chose if there were further attacks on U.S. interests by Iranian forces or their proxies. The European Union, Britain and Oman, meanwhile, urged the two sides to make diplomatic efforts to defuse the crisis Weak showings in factory activity surveys in Japan and China on Monday only added to gloom over the outlook for global growth after a disappointing U.S. manufacturing readout on Friday. Service sector surveys in Europe, due later on Monday and a U.S. non-manufacturing survey due on Tuesday were also in focus. So too were November trade, construction approvals and retail figures for Australia through the week, ahead of a central bank meeting in a month..
  • Wall Street’s worst fears of a year-end funding squeeze never materialized thanks in large part to the quarter-trillion dollars the Federal Reserve stuffed into the market to ensure nothing became gummed up. The question now, though, is what it will take for the U.S. central bank to withdraw from its daily liquidity operations in the $2.2 trillion market for repurchase agreements, or repos - after it became a dominant player in a short three months. The New York Fed began injecting billions of dollars of liquidity into the repo market in mid-September, when a confluence of events sent the cost of overnight loans as high as 10%, more than four times the Fed’s rate at the time. A month later, the Fed moved to expand its balance sheet - and boost the level of reserves - by snapping up $60 billion a month in U.S. Treasury bills. The Fed will continue pumping tens of billions a day into the repo market through at least the end of January. Its ability to exit from the repo market after that time will depend on how long it takes the central bank to make the balance sheet large enough so there are adequate reserves in the banking system - and the repo operations are no longer needed Minutes from the Fed’s December policy meeting released on Friday showed its staffers expected repo operations to be “gradually” reduced after mid-January. However, staff members also said the central bank may need to continue offering some repo operations until at least April, when tax payments could reduce the level of reserves. Another challenge for Fed officials: Deciding just how big the central bank’s balance sheet, which is currently about $4 trillion, should be. Fed policymakers have said they will continue purchasing Treasury bills into the second quarter of 2020 with the goal of bringing reserves back above the level seen in mid-September, when they fell below $1.5 trillion. Bringing reserves to $1.7 trillion would provide a cushion of about $200 billion to absorb shocks during periods of tight liquidity, said Joseph Abate, a short rate strategist for Barclays. Holding up to $2 trillion in reserves could offer a bigger cushion and reduce the likelihood of volatility in short-term borrowing markets, depending on what the demand is for reserves, he said. Some financial firms are urging the Fed to stay involved permanently through a standing repo facility, which would allow firms to trade Treasury holdings for cash. But Fed officials are still working out the details and plan to keep discussing the issue at future meetings, the minutes from Friday showed. Richmond Fed President Thomas Barkin said on Friday that in addition to a standing repo facility, long-term fixes for providing more liquidity in money markets could include adjusting liquidity regulations and setting restrictions on other programs that can affect reserves, such as the foreign repo pool. In the meantime, Fed officials could make changes to the repo offerings to help wean markets off the temporary support. Officials could reduce the frequency or the size of the repo offerings after January and bring them back during times of expected stress, Abate said.
  • Oil prices rose a further 2% on Monday, pushing Brent above $70 a barrel, as rhetoric from the United States, Iran and Iraq fanned tensions in the Middle East after the killing of a top Iranian general. The gains extended Friday's more-than-3% surge after a U.S. air strike in Iraq killed Iranian commander Qassem Soleimani on Friday, heightening concerns that a widening Middle East conflict that could disrupt oil supplies. The region accounts for nearly half of the world's oil production, while a fifth of the world's oil shipments pass through the Strait of Hormuz. On Sunday President Trump threatened to impose sanctions on Iraq, the second largest producer among the OPEC, if U.S. troops were forced to withdraw from the country. Baghdad earlier called on American and other foreign troops to leave Iraq. Trump also said that the United States will retaliate against Iran if Tehran were to strike back after the killing. However, Goldman Sachs analysts said the current risk premium embedded in Brent monthly price spreads is already elevated and an actual supply disruption is now necessary to sustain current oil prices. In the United States, U.S. crude stocks fell by their most since June as exports exceeded 4 million barrels per day for the first time in history, the Energy Information Administration said on Friday. Elsewhere, bad weather shut all four east Libyan oil export terminals on Sunday and the closure could last three days, port sources said.

 

 
Intraday RESISTANCE LEVELS
6th January 2020 R1 R2 R3
GOLD-XAU 1,578-1,584 1,590 1,600-1,622
Silver-XAG 18.50 18.70-19.00 19.65
Crude Oil 64.20-64.70 65.50 66.00-66.60
EURO/USD 1.1180-1.1230 1.1280 1.1350-1.1400
GBP/USD 1.3100-1.3150 1.3200 1.3250-1.3320
USD/JPY 108.50-109.00 109.50 110.00-110.70

Intraday SUPPORTS LEVELS
6th January 2020 S1 S2 S3
GOLD-XAU 1,571-1.564 1,557 1,546--1,536
Silver-XAG 18.25-18.00 17.60 17.00-16.50
Crude Oil 63.70-63.00 62.60 62.00-61.40
EURO/USD 1.1110 1.1060 1.0980-1.0930
GBP/USD 1.3060-1.3010 1.2930 1.2850-1.2780
USD/JPY 107.80-107.00 106.50 106.00-105.70

Intra-Day Strategy (6th January 2020)
GOLD-XAU Buy on Dips
Silver-XAG Buy on Dips
Crude Oil Neutral to Buy
EUR/USD Neutral to Buy
GBP/USD Neutral to Sell
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Friday made its intraday high of US$1553.33/oz and low of US$1527.89/oz. Gold up 1.498% at US$1551.75/oz.

Technicals in Focus:

In daily charts, prices are below 100DMA (1483) and breakage above will call for 1492. MACD is below zero line but 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 1571-1536 with risk below 1536, targeting 1578-1584-1590 and 1600-1622. Sell below 1578-1622 keeping stop loss closing above 1622, targeting 1571-1564-1556 and 1546-1536.

 
Intraday Support Levels
S1     1,571-1.564
S2     1,557
S3     1,546--1,536
Intraday Resistance Levels
R1     1,578-1,584
R2     1,590
R3     1,600-1,622

Technical Indicators

Name   Value Action
14DRSI  

80.938

Buy
20-DMA   1488.90 Buy
50-DMA  

1481.16

Buy
100-DMA   1493.26 Buy
200-DMA   1421.92 Buy
STOCH(5,3)   91.621 Buy
MACD(12,26,9)   14.185 Sell

Silver - XAG

AAFX TRADING

Silver on Friday made its intraday high of US$18.25/oz and low of US$17.97/oz settled up by 0.278% at US$18.02/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (17.15), breakage above will lead to 17.61. 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 neutral 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 18.25-16.00 targeting 18.50-18.70 and 19.10-19.65; stop breakage below 16.00. Sell below 18.50-19.65 with stop loss above 19.65; targeting 18.25-17.60-17.00 and 16.25-16.00-15.70.

 
Intraday  Support Levels
S1     18.25-18.00
S2     17.60
S3     17.00-16.50

Intraday  Resistance Levels
R1     18.50
R2     18.70-19.00
R3     19.65

TECHNICAL INDICATORS
Name   Value Action
14DRSI   76.226 Buy
20-DMA   17.33 Buy
50-DMA   17.27 Buy
100-DMA   17.53 Buy
200-DMA   16.41 Buy
STOCH(5,3)   72.268 Buy
MACD(12,26,9)   0.286 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Friday made an intra‐day high of US63.89/bbl, intraday low of US$63.89/bbl and settled up by 3.032% to close at US$62.85/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 200DMA i.e. 56.35 which is a resistance level and breakage above will call for 57.00-58.00. MACD is above zero line and histograms are in increasing mode will bring bullish stance in the upcoming sessions. The Stochastic Oscillator is in overbought region and giving positive crossover for confirmation of bullish stance; while the RSI is in neutral region and more downside can be expected to reach the oversold region, which is highly probable.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy above 63.70-61.00 with risk daily closing below 61.00 and targeting 64.20-64.70-65.50 and 66.00-66.60. Sell below 64.20-66.60 with stop loss at 66.60; targeting 63.70-63.00-62.60 and 62.00-61.40-60.90.

 
Intraday Support Levels
S1     63.70-63.00
S2     62.60
S3     62.00-61.40

Intraday Resistance Levels
R1     64.20-64.70
R2     65.50
R3     66.00-66.60

TECHNICAL INDICATORS
Name   Value Action
14DRSI   70.298 Sell
20-DMA   60.29 Buy
50-DMA   58.15 Buy
100-DMA   56.70 Buy
200-DMA   57.76 Buy
STOCH(5,3)   53.130 Sell
MACD(12,26,9)   1.147 Sell

EUR/USD

AAFX TRADING

EUR/USD on Friday an intraday low of US$1.1124/EUR, high of US$1.1179/EUR and settled the day down by 0.098% to close at US$1.1160/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 50DMA (1.1040), which become immediate resistance level, break above will target 1.1100. 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 in neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Buy

Buy above 1.1180-1.0890 with risk below 1.0890, targeting 1.1230-1.1280 and 1.1350-1.1400. Sell below 1.1150-1.1350 targeting 1.1110-1.1060-1.1030 and 1.0960-1.0860 with stop-loss at daily closing above 1.1300.

 
Intraday Support Levels
S1     1.1110
S2     1.1060
S3     1.0980-1.0930

Intraday  Resistance Levels
R1     1.1180-1.1230
R2     1.1280
R3     1.1350-1.1400

TECHNICAL INDICATORS
Name   Value Action
14DRSI   56.968 Buy
20-DMA   1.1127 Buy
50-DMA   1.1089 Buy
100-DMA   1.1061 Buy
200-DMA   1.1141 Buy
STOCH(5,3)   46.958 Sell
MACD(12,26,9)   -0.001 Buy

GBP/USD

AAFX TRADING

GBP/USD on Friday made an intra‐day low of US$1.3052/GBP, high of US$1.3159/GBP and settled the day down by 0.436% to close at US$1.3081/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.2769) 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 1.3100-1.3420 with targets at 1.3060-1.3020 and 1.2930-1.2850 stop-loss should be below 1.3420. Buy above 1.3060-1.2750 with targets 1.3100-1.3150-1.3200 and 1.3250-1.3320 with stop loss closing below 1.2750.

 
Intraday Support Levels
S1     1.3060-1.3010
S2     1.2930
S3     1.2850-1.2780

Intraday Resistance Levels
R1     1.3100-1.3150
R2     1.3200
R3     1.3250-1.3320

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

51.642

Buy
20-DMA   1.3114 Sell
50-DMA   1.2987 Buy
100-DMA   1.2696 Buy
200-DMA   1.2689 Buy
STOCH(5,3)   36.940 Buy
MACD(12,26,9)   0.0027 Sell

USD/JPY

AAFX TRADING

USD/JPY on Friday made intra‐day low of JPY107.83/USD and made an intraday high of JPY108.62/USD and settled the day down by 0.421% at JPY108.10/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (107.70), 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 108.50-111.70 with risk above 111.70 targeting 107.80-107.00-106.50 and 106.00-105.70. Long positions above 107.80-105.70 with targets of 108.90-109.50-110.00 and 110.70-111.30 with stop below 105.50.

 
Intraday Support Levels
S1     107.80-107.00
S2     106.50
S3     106.00-105.70

INTRADAY RESISTANCE LEVELS
R1     108.50-109.00
R2     109.50
R3     110.00-110.70

TECHNICAL INDICATORS
Name   Value Action
14DRSI   60.367 Buy
20-DMA   109.02 Sell
50-DMA   108.91 Buy
100-DMA   108.15 Buy
200-DMA   108.65 Sell
STOCH(9,6)   18.253 Buy
MACD(12,26,9)   -0.121 Buy

AAFX TRADING
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