AAFX TRADING

Daily Market Lookup

  • Asian shares were dragged to near two-month lows on Monday by Chinese markets, which plunged on their first trading day after a long break on fears the coronavirus epidemic would hit demand in the world’s second-largest economy. Aiming to head off any panic, the Chinese government took steps to shore up an economy hit by travel curbs and business shut-downs because of the virus. Despite the support, Chinese shares were deep in red, with the blue-chip index stumbling 7.8% to a 4-1/2 month trough. The benchmark Shanghai Composite index lost $420 billion of its value while the yuan opened at its weakest level in 2020, sliding past the symbolic 7-per-dollar level. While China’s losses were heavy, they were mostly a product of selling pressure that had built up over the Lunar New Year break, not a reflection of new market fears. In contrast, futures for U.S. and European shares inched up, oil pared early losses while safe havens Japanese yen and gold stepped back from recent highs. Still, a raft of global economists, including Citigroup, Nomura and JPMorgan, downgraded their forecasts for China’s GDP growth. That means equity markets, and especially those in Asia, will likely remain under pressure as the number of infections is expected to increase in the weeks ahead As Chinese markets opened after the 10-day break, Shanghai copper hit its daily selling limit as did Shanghai crude oil while yields on the country’s 30-year government bonds traded in the interbank market were down 18.5 basis points.
  • The dollar fell Friday, paced by losses against safe-haven currencies like the yen amid fears of a global pandemic as Chinese health authorities showed little sign they have a grip on the outbreak. The new coronavirus has spread to nearly 10,000 people worldwide and the death toll in China rose to 213, raising concerns over China's ability to contain the outbreak, which could severely curtail global growth. Against the backdrop of the coronavirus risk, investors have piled into safe havens like the yen and Swiss franc.U.S. data, meanwhile, showing the ongoing weakness in manufacturing did little to support the greenback. The Chicago Purchasing Managers' Index (PMI) jumped to 42.9, well below forecasts of 48.8. That was the lowest reading since September 2015, as the slump in manufacturing activity continues. As a leading indicator of the U.S. economy, the Chicago PMI helps economists measure business activity and new orders. Consumer spending, meanwhile, increased 0.3% in December, in line with forecasts. With just hours to go until the U.K. leaves the EU, the pound added to gains from a day earlier, rising 0.69% to $1.3184. The pound surged on Thursday in the wake of the Bank England's decision to keep rates steady, with outgoing BoE Governor Mark Carney saying a cut would have risked inflation rising above the central bank's target. EUR/USD rose 0.46% to $1.1081 despite ongoing signs of weakness in the eurozone economy after a preliminary reading of fourth-quarter GDP fell short of forecasts.
  • Oil prices extended their losses on Monday, dragged down by worries about lower demand in China, the world's largest oil importer, following a coronavirus outbreak there Brent and U.S. West Texas Intermediate (WTI) crude fell for a fourth week in a row last week after airlines canceled flights to China. Supply chains across the world's second-largest economy have also been disrupted, prompting its biggest refiner Sinopec to cut output. China's measures to support its economy might help put a floor under oil prices in the short term, even though the outlook for oil demand remains bearish, said Michael McCarthy, chief market strategist at CMC Markets in Sydney China's factory activity stalled in January as export orders fell, and analysts expect a big plunge in February's data as the virus outbreak hits demand in the country. China's central bank planned to inject more liquidity to shore up its economy on Monday, and pledged over the weekend to use various monetary policy tools to help allay the impact of the virus outbreak. The Organization of the Petroleum Exporting Countries (OPEC)and its allies could bring forward a March meeting to February to discuss the impact on oil demand from the virus flare-up. Already, OPEC and non-OPEC's Joint Technical Committee (JTC) have scheduled to meet in early February to assess the impact of the virus, OPEC+ sources told Reuters. OPEC's oil output plunged in January to the lowest since 2009 after several members led by Saudi Arabia over-delivered on a new agreement to cut production and as Libya's supply slumped. Supply chains across the world's second-largest economy have also been disrupted as more airlines cancelled flights to the country, prompting its biggest refiner Sinopec to cut output. Sanford C. Bernstein & Co. said oil could fall to around $50 a barrel without OPEC intervention, while Morgan Stanley said if the virus continues to escalate for three to four months, it would cut around 75,000 barrels a day from China’s 2020 oil demand growth. If the outbreak peaks in one to two months, first quarter demand growth would fall to 150,000 barrels a day from 310,000, it said.

 

 
Intraday RESISTANCE LEVELS
3rd February 2020 R1 R2 R3
GOLD-XAU 1,580 1,590 1,600-1,611
Silver-XAG 17.90-18.25 18.50 18.70-19.10
Crude Oil 52.20-52.70 53.80 54.70-55.20
EURO/USD 1.1100-1.1190 1.1230 1.1280-1.1350
GBP/USD 1.3160-1.3200 1.3250 1.3300.1.3350
USD/JPY 108.90-109.50 109.90 110.70-111.20

Intraday SUPPORTS LEVELS
3rd February 2020 S1 S2 S3
GOLD-XAU 1,571-1.564 1,548 1,542-1,536
Silver-XAG 17.40-17.10 16.60 16.25-15.90
Crude Oil 51.50 51.00-50.20 49.40
EURO/USD 1.1060-1.1010 1.0980 1.0930-1.0890
GBP/USD 1.3100-1.3060 1.3010 1.2980-1.2930
USD/JPY 108.50-107.80 107.00 106.50-106.00

Intra-Day Strategy (3rd February 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$1590.48/oz and low of US$1570.89/oz. Gold up 0.937% at US$1588.87/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 oversold 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 1574-1536 with risk below 1536, targeting 1584-1590 and 1600-1611-1620. Sell below 1584-1620 keeping stop loss closing above 1620, targeting 15780-1564-1556 and 1542-1536.

 
Intraday Support Levels
S1     1,571-1.564
S2     1,548
S3     1,542-1,536
Intraday Resistance Levels
R1     1,580
R2     1,590
R3     1,600-1,611

Technical Indicators

Name   Value Action
14DRSI  

64.614

Buy
20-DMA   1562.83 Buy
50-DMA  

1513.48

Buy
100-DMA   1502.60 Buy
200-DMA   1449.91 Buy
STOCH(5,3)   67.621 Buy
MACD(12,26,9)   16.161 Sell

Silver - XAG

AAFX TRADING

Silver on Friday made its intraday high of US$18.08/oz and low of US$17.77/oz settled up by 1.144% at US$18.02/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 100DMA (17.55), breakage below will lead to 17.30. 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 oversold region and giving negative crossover to show downside move for the intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above, buy above 17.40-15.90 targeting 17.90-18.25-18.50 and 18.70-19.10; stop breakage below 16.00. Sell below 17.90-20.10 with stop loss above 20.10; targeting 17.50-17.00 and 16.25-16.00.

 
Intraday  Support Levels
S1     17.40-17.10
S2     16.60
S3     16.25-15.90

Intraday  Resistance Levels
R1     17.90-18.25
R2     18.50
R3     18.70-19.10

TECHNICAL INDICATORS
Name   Value Action
14DRSI   49.194 Buy
20-DMA   17.93 Buy
50-DMA   17.43 Buy
100-DMA   17.51 Buy
200-DMA   16.65 Buy
STOCH(5,3)   56.268 Sell
MACD(12,26,9)   0.050 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Friday made an intra‐day high of US53.36/bbl, intraday low of US$51.02/bbl and settled down by 2.568% to close at US$51.59/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 200DMA i.e. 57.76 which is a resistance level and breakage above will call for 58.60. MACD is above zero line and histograms are in increasing mode will bring bullish 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 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 51.50-49.40 with risk daily closing below 49.50 and targeting 52.20-52.70-53.80 and 54.70-55.20. Sell in between 52.20-56.00 with stop loss at 56.00; targeting 51.50-51.00 and 50.20-49.40.

 
Intraday Support Levels
S1     51.50
S2     51.00-50.20
S3     49.40

Intraday Resistance Levels
R1     52.20-52.70
R2     53.80
R3     54.70-55.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   24.112 Sell
20-DMA   56.54 Sell
50-DMA   58.29 Sell
100-DMA   56.98 Sell
200-DMA   57.08 Buy
STOCH(5,3)   23.130 Sell
MACD(12,26,9)   -2.004 Sell

EUR/USD

AAFX TRADING

EUR/USD on Friday an intraday low of US$1.1016/EUR, high of US$1.1095/EUR and settled the day up by 0.547% to close at US$1.1091/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 oversold 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 1.1060-1.0890 with risk below 1.0890, targeting 1.1100-1.1180-1.1230 and 1.1280-1.1350. Sell below 1.1100-1.1350 targeting 1.1020-1.0980 and 1.0930-1.0860 with stop-loss at daily closing above 1.1350.

 
Intraday Support Levels
S1     1.1060-1.1010
S2     1.0980
S3     1.0930-1.0890

Intraday  Resistance Levels
R1     1.1100-1.1190
R2     1.1230
R3     1.1280-1.1350

TECHNICAL INDICATORS
Name   Value Action
14DRSI   49.673 Buy
20-DMA   1.1094 Sell
50-DMA   1.1068 Sell
100-DMA   1.1068 Sell
200-DMA   1.1126 Sell
STOCH(5,3)   83.758 Sell
MACD(12,26,9)   -0.001 Buy

GBP/USD

AAFX TRADING

GBP/USD on Friday made an intra‐day low of US$1.3080/GBP, high of US$1.3209/GBP and settled the day up by 0.564% to close at US$1.3202/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 1.3060-1.3300 with targets at 1.3020-1.2930 and 1.2850-1.2800 stop-loss should be below 1.3420. Buy above 1.3060-1.2750 with targets 1.3100-1.3150 and 1.3200-1.3250-1.3320 with stop loss closing below 1.2750.

 
Intraday Support Levels
S1     1.3100-1.3060
S2     1.3010
S3     1.2980-1.2930

Intraday Resistance Levels
R1     1.3160-1.3200
R2     1.3250
R3     1.3300.1.3350

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

47.909

Buy
20-DMA   1.3079 Sell
50-DMA   1.3049 Sell
100-DMA   1.2828 Buy
200-DMA   1.2688 Buy
STOCH(5,3)   59.940 Buy
MACD(12,26,9)   0.0027 Sell

USD/JPY

AAFX TRADING

USD/JPY on Friday made intra‐day low of JPY108.30/USD and made an intraday high of JPY109.13/USD and settled the day down by 0.542% at JPY108.35/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 108.90-112.70 with risk above 112.70 targeting 108.50-107.80-107.00 and 106.50-106.00. Long positions above 108.50-106.00 with targets of 108.90-109.50-110.70 and 111.30-112.40-113.00 with stop below 107.00.

 
Intraday Support Levels
S1     108.50-107.80
S2     107.00
S3     106.50-106.00

INTRADAY RESISTANCE LEVELS
R1     108.90-109.50
R2     109.90
R3     110.70-111.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   38.402 Buy
20-DMA   109.40 Buy
50-DMA   109.18 Buy
100-DMA   108.72 Buy
200-DMA   108.43 Buy
STOCH(9,6)   22.253 Sell
MACD(12,26,9)   -0.126 Buy

AAFX TRADING
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