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Daily Market Lookup

  • Asian shares rebounded on Tuesday as investors’ reassessed the risk of an all-out conflict between the United States and Iran, while Wall Street battled back to the black as tech stocks climbed. Oil surrendered hefty gains as some speculated Iran would be unlikely to strike against the U.S. in a way that would disrupt supplies, and its own crude exports. The mood calmed a little as the session passed with no new aggression. Instead there was much confusion when the U.S. military wrote to Iraq on Monday saying it would pull out of the country, a letter seen by Reuters showed. Yet U.S. Defense Secretary Mark Esper told Pentagon reporters that no decision had been made and the military said the letter was only a poorly worded draft. Surveys of service sectors out overnight showed an improvement in the United States, UK and EU, stirring speculation the closely-watched ISM measure of U.S. services due later Tuesday will also show strength.
  • The U.S. dollar was near flat on Tuesday in Asia as traders remained cautious about situation in the Middle East. The U.S. has no plans to pull its troops out of Iraq, Defense Secretary Mark Esper said on Monday, following reports of a U.S. military letter informing Iraq officials about the repositioning of troops in preparation to leave. Last week, U.S. President Donald ordered a drone strike in Baghdad and killed Iranian military commander Qassem Soleimani, raising tensions between the two nations. Iran’s leaders have promised to avenge the killing. ISM non-manufacturing PMI is due later in the day. Factory orders and trade balance data are also due. On Monday, data showed the U.S. manufacturing sector contracted in December by the most in more than a decade, with order volumes crashing to a near 11-year low and factory employment falling for a fifth straight month. On the Sino-U.S. trade front, Washington and Beijing are expected to sign a phase one deal on Jan. 15. Meanwhile, the safe-haven yen gained on Monday amid heightened geopolitical tensions, but lost momentum today and dropped 0.1% against the U.S. dollar.
  • Japan’s services sector saw its deepest contraction in more than three years in December as business activity took a hit from weak demand at home and abroad, a private survey showed on Tuesday. The final seasonally adjusted Jibun Bank Japan Services Purchasing Managers’ Index (PMI) fell to 49.4 in December from 50.3 in November, declining to its lowest level since September 2016. It was below the 50 mark that separates expansion from contraction for the second time in three months, and down from a preliminary reading of 50.6. With growth in new work remaining subdued, companies turned their focus on outstanding orders. New export business - another key activity gauge - slumped to a six-month low, suggesting the economy is likely to remain under pressure as slower global growth hurts demand. Japan’s economy grew at an annualized 1.8% in the third quarter because of stronger consumer and business spending, but analysts expect it to shrink in the quarter through December due to deepening internal and external strains. Retail sales fell 2.1% in November as consumer sentiment stayed depressed after October’s sales tax hike, which looks to have hit private consumption harder than the government thought. The composite PMI, which includes both manufacturing and services, fell for the third straight month in December, seeing the fastest pace of decline since April 2014. Oil prices retreated on Tuesday in Asia despite continuing tension between the U.S. and Iran.
  • Oil prices surged on Monday following the news that a U.S. airstrike killed a top Iranian general, sparking an escalation in conflict between the two countries. On Monday, the U.S. has ordered more troops to the Middle East after Iran’s Supreme Leader Ayatollah Ali Khamenesaid it will retaliate against the attack that killed General Qassem Soleimani. Prices were also supported this week by higher compliance among the Organization of the Petroleum Exporting Countries (OPEC) on meeting production quota curbs aimed at reducing supply. OPEC members pumped 29.50 million barrels per day (bpd) last month, down 50,000 bpd from November's revised figure, according to a Reuters survey. The American Petroleum Institute will release its snapshot of U.S. oil inventories later in the day. The API numbers aren’t perfectly correlated to the official government stockpile numbers, which come out Wednesday, but they do offer a glimpse of how they may be trending. The API reported a drop in oil inventories of 7.9 million barrels last week. Oil prices fell more than 1% on Tuesday as investors reconsidered the likelihood of Middle East supply disruptions in the wake of the United States killing a top Iranian military commander. Prices surged during the previous two sessions, with Brent reaching its highest since September while WTI rose to the most since April. The gains followed fears of escalating conflict and potential Middle East supply disruptions after the Jan. 3 drone strike in Baghdad that killed Iran's Qassem Soleimani. But, some analysts have tempered expectations for a widespread conflict. Prices were also supported by higher compliance among the Organization of the Petroleum Exporting Countries (OPEC) on meeting production quota curbs aimed at reducing supply. OPEC members pumped 29.50 million barrels per day (bpd) last month, down 50,000 bpd from November's revised figure, according to a Reuters survey. U.S. crude oil stockpiles likely dropped last week for a fourth week in a row as exports ramped up, a Reuters poll showed on Monday. Six analysts estimated, on average, that crude stocks fell by 4.1 million barrels in the week to Jan 3. Inventories for refined products were expected to rise with gasoline stocks set to gain for the ninth straight week, according to the poll. Even before Soleimani's death, investors were increasing their bullish WTI holdings, with money managers raising their net-long positions in the week to Dec. 31, the Commodity Futures Trading Commission said on Monday.

 

 
Intraday RESISTANCE LEVELS
7th January 2020 R1 R2 R3
GOLD-XAU 1,564-1,571 1,578 1,584-1,590
Silver-XAG 18.25--18.50 18.70 19.00-19.65
Crude Oil 63.00-63.70 64.20 64.70-65.50
EURO/USD 1.1230 1.1280 1.1350-1.1400
GBP/USD 1.3160 1.3200 1.3250-1.3320
USD/JPY 108.50-109.00 109.50 110.00-110.70

Intraday SUPPORTS LEVELS
7th January 2020 S1 S2 S3
GOLD-XAU 1,557 1,546--1,536 1,528
Silver-XAG 18.00 17.60 18.25--18.50
Crude Oil 62.00-61.40 60.50 59.90-59.50
EURO/USD 1.1160-1.1110 1.1060 1.0980-1.0930
GBP/USD 1.3100-1.3060 1.3010 1.2930-1.2850
USD/JPY 107.80-107.00 106.50 106.00-105.70

Intra-Day Strategy (7th 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 Monday made its intraday high of US$1583.09/oz and low of US$1559.66/oz. Gold up 0.355% at US$1565.53/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 1564-1590 keeping stop loss closing above 1590, targeting 1557-1546-1536 and 1528-1518.

 
Intraday Support Levels
S1     1,557
S2     1,546--1,536
S3     1,528
Intraday Resistance Levels
R1     1,564-1,571
R2     1,578
R3     1,584-1,590

Technical Indicators

Name   Value Action
14DRSI  

82.938

Buy
20-DMA   1498.90 Buy
50-DMA  

1483.75

Buy
100-DMA   1494.27 Buy
200-DMA   1424.61 Buy
STOCH(5,3)   78.621 Sell
MACD(12,26,9)   21.031 Sell

Silver - XAG

AAFX TRADING

Silver on Monday made its intraday high of US$18.49/oz and low of US$18.00/oz settled up by 0.237% at US$18.12/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 18.00-16.00 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     18.00
S2     17.60
S3     18.25--18.50

Intraday  Resistance Levels
R1     18.25--18.50
R2     18.70
R3     19.00-19.65

TECHNICAL INDICATORS
Name   Value Action
14DRSI   70.032 Buy
20-DMA   17.39 Buy
50-DMA   17.27 Buy
100-DMA   17.53 Buy
200-DMA   16.42 Buy
STOCH(5,3)   48.268 Sell
MACD(12,26,9)   0.274 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Monday made an intra‐day high of US64.52/bbl, intraday low of US$62.46/bbl and settled down by 1.462% to close at US$62.64/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 62.00-59.50 with risk daily closing below 59.50 and targeting 63.00-63.70-64.20 and 64.70-65.50. Sell below 63.00-66.60 with stop loss at 66.60; targeting 62.00-61.40-60.90 and 60.50-59.90-59.50.

 
Intraday Support Levels
S1     62.00-61.40
S2     60.50
S3     59.90-59.50

Intraday Resistance Levels
R1     63.00-63.70
R2     64.20
R3     64.70-65.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   66.298 Sell
20-DMA   60.69 Buy
50-DMA   58.40 Buy
100-DMA   56.86 Buy
200-DMA   57.79 Buy
STOCH(5,3)   56.130 Sell
MACD(12,26,9)   1.185 Sell

EUR/USD

AAFX TRADING

EUR/USD on Monday an intraday low of US$1.1156/EUR, high of US$1.1204/EUR and settled the day up by 0.287% to close at US$1.1195/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 1.1160-1.0890 with risk below 1.0890, targeting 1.1230-1.1280 and 1.1350-1.1400. Sell below 1.1200-1.1350 targeting 1.1160-1.1110-1.1060-1.1030 and 1.0960-1.0860 with stop-loss at daily closing above 1.1300.

 
Intraday Support Levels
S1     1.1160-1.1110
S2     1.1060
S3     1.0980-1.0930

Intraday  Resistance Levels
R1     1.1230
R2     1.1280
R3     1.1350-1.1400

TECHNICAL INDICATORS
Name   Value Action
14DRSI   61.968 Buy
20-DMA   1.1129 Buy
50-DMA   1.1089 Buy
100-DMA   1.1061 Buy
200-DMA   1.1141 Buy
STOCH(5,3)   54.958 Sell
MACD(12,26,9)   -0.001 Buy

GBP/USD

AAFX TRADING

GBP/USD on Monday made an intra‐day low of US$1.3063/GBP, high of US$1.3173/GBP and settled the day up by 0.635% to close at US$1.3167/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 1.3160-1.3420 with targets at 1.3100-1.3060-1.3020 and 1.2930-1.2850 stop-loss should be below 1.3420. Buy above 1.3100-1.2750 with targets 1.3150-1.3200 and 1.3250-1.3320 with stop loss closing below 1.2750.

 
Intraday Support Levels
S1     1.3100-1.3060
S2     1.3010
S3     1.2930-1.2850

Intraday Resistance Levels
R1     1.3160
R2     1.3200
R3     1.3250-1.3320

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

42.642

Sell
20-DMA   1.3119 Sell
50-DMA   1.2996 Buy
100-DMA   1.2707 Buy
200-DMA   1.2689 Buy
STOCH(5,3)   42.940 Sell
MACD(12,26,9)   0.0027 Sell

USD/JPY

AAFX TRADING

USD/JPY on Monday made intra‐day low of JPY107.76/USD and made an intraday high of JPY108.50/USD and settled the day up by 0.493% at JPY108.36/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

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