AAFX TRADING

Daily Market Lookup

  • The U.S. dollar edged higher in early European trade Wednesday, with the tone cautious given the event risk, including a central bank meeting and key U.S. unemployment data, later this week. The euro has seen selling, falling to a one-week low of $1.0817, after Tuesday’s decision by Germany's highest court to give the European Central Bank three months to justify purchases under its bond-buying program. This comes as German factory orders slumped 15.6% in March, their biggest monthly decline since German reunification in 1990, as the coronavirus slashed domestic and foreign demand for goods from Europe's biggest economy. Sterling has also edged lower ahead of Thursday’s Bank of England meeting. The U.K.’s central bank has announced a wide range of measures since the beginning of the coronavirus crisis, including slashing rates to record lows and ramping up its quantitative easing program to £645 billion. With this in mind, new stimulus is unlikely to be unveiled Thursday, but the foreign exchange market will be keeping a wary eye on the bank’s updated macroeconomic projections and comments regarding the possibility of a further increase in the QE program down the line, particularly as incoming economic data looks so weak. Later in the session sees the release of ADP (NASDAQ:ADP)'s private sector employment report for April, the first full measure of a month the country spent on lockdown restrictions, ahead of Friday’s non-farm payrolls. This should give a flavor about the rise in U.S. unemployment during the month and whether government support measures such as the Paycheck Protection Program targeting small and medium-sized enterprises are having any positive effects on layoffs. The dollar was up on Wednesday morning in Asia after Germany’s highest court ruled overnight that the European Central Bank justify purchases under its bond-buying program. The country’s Federal Court of Justice gave the ECB three months to justify the purchases or risk losing the Bundesbank as a participant in the program to fight the economic impact of the COVID-19 virus. U.S. President Donald Trump pressed China about the origins of the virus overnight as Chinese markets reopened after a five-day holiday.
  • Asian shares extended gains on Wednesday, as investors saw China’s yuan fixing offering a modest olive branch to Washington amid a resurgence in trade tensions, while oil ended its winning streak on oversupply fears and weak demand. China's central bank set the yuan CNY= at a broadly neutral midpoint, analysts said, helping take the focus off the exchange rate, a typically contentious point in Sino-U.S. ties. That helped mainland stocks claw back initial losses on their first day of trade since breaking for a holiday last week European futures pointed to a weak start after a court decision challenging German participation in Europe’s stimulus program fanning worries about a bumpy recovery. U.S. President Donald Trump has repeatedly taken aim at China as the source of the pandemic and warned that it would be held to account On Tuesday, he urged China to be transparent about the origins of the novel coronavirus that has killed more than a quarter of a million people worldwide since it started in the Chinese city of Wuhan late last year. In currencies, the yen scaled a three-year high against the euro and a seven-week peak on the dollar on Wednesday after the German court decision. Germany’s highest court on Tuesday gave the European Central Bank three months to justify purchases under its bond-buying programme, or lose the Bundesbank as a participant in a scheme aimed at cushioning the economic blow from the coronavirus The decision spooked investors who have been caught this month between grim economic figures and worries about worsening U.S.-China relations, and optimism over easing COVID-19 lockdowns in many countries. Traders will keep an eye for the ADP National Employment Report of private U.S. payrolls on Wednesday. It could foretell the damage to be revealed on Friday in the official U.S. government measure of jobs in April, estimated to show nearly 22 million jobs were lost last month.
  • Oil prices reversed course to edge lower on Wednesday as a higher than expected rise in U.S. inventories refocused investors on the risk of oversupply amid a coronavirus-driven slump in fuel demand. Oil slipped after a report showed U.S. crude inventories rose 8.4 million barrels last week, more than expected, according to data from the API late on Tuesday. Oil prices had gained recently as European and Asian countries ended lockdowns aimed at halting the coronavirus spread and as producers axed supply after the demand crunch. Global inventories are still expected to reach potential storage limits by June, according to Chris Midgley, Global Director of Analytics of S&P Global Platts. Gasoline stocks in the U.S., the world's biggest producer and consumer of oil, fell by 2.2 million barrels, API reported, compared with analysts' expectations in a Reuters poll for a 43,000 barrel increase, and refinery crude runs rose. Traders will be looking for further confirmation of the inventory data when the Energy Information Administration comes out later on Wednesday. During the previous session after the American Petroleum Institute (API) had predicted an 8.12- million-barrel-increase in crude oil inventories for the week ending May 1 overnight. API predicted a larger increase of 9.987 million barrels for the previous week. Even U.S. President Donald Trump had his say, as he tweeted “Oil prices moving up nicely as demand begins again!” on Tuesday morning. But investor caution rose the next day. Initial optimism that OPEC+ production cuts were reducing supply as demand slowly increased with some countries loosening lockdown measures earlier in the week was not enough to counter the black liquid’s oversupply dilemma. Investors warned that global storage could be filled in weeks with the road to recovery long and uncertain.

 

 
Intraday RESISTANCE LEVELS
6th May 2020 R1 R2 R3
GOLD-XAU 1,709-1,720 1,729 1,740-1,748
Silver-XAG 15.20-15.60 16.10 16.70-17.00
Crude Oil 25.80-26.50 28.40 29.00-29.90
EURO/USD 1.0900-1.0970 1.1030 1.1060-1.1150
GBP/USD 1.2470--1.2500 1.2590 1.2645-1.2700
USD/JPY 106.90-107.50 108.30 109.40-110.20

Intraday SUPPORTS LEVELS
6th May 2020 S1 S2 S3
GOLD-XAU 1,690-1,674 1,660 1,644-1,636
Silver-XAG 14.90-14.40 13.90 13.60-12.90
Crude Oil 24.70 23.50 22.55-22.00
EURO/USD 1.0820 1.0750 1.0700-1.0630
GBP/USD 1.2400-1.2320 1.2240 1.2165-1.2100
USD/JPY 106.20 105.60-105.00 104.30

Intra-Day Strategy (6th May 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 Tuesday made its intraday high of US$1711.11/oz and low of US$1689.27/oz. Gold up 0.239% at US$1705.06/oz.

Technicals in Focus:

In daily charts, prices are above 50DMA (1596) and breakage below will call for 1550. 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 negative crossover to bearish stance for intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above; buy above 1690-1636 with risk below 1635, targeting 1710-1720-1729 and 1740-1748. Sell below 1700-1748 keeping stop loss closing above 1748, targeting 1690-1674 and 1660-1645.

 
Intraday Support Levels
S1     1,690-1,674
S2     1,660
S3     1,644-1,636
Intraday Resistance Levels
R1     1,709-1,720
R2     1,729
R3     1,740-1,748

Technical Indicators

Name   Value Action
14DRSI  

49.609

Buy
20-DMA   1692.45 Buy
50-DMA  

1637.74

Buy
100-DMA   1591.84 Buy
200-DMA   1539.85 Buy
STOCH(5,3)   15.621 Sell
MACD(12,26,9)   -27.894 Sell

Silver - XAG

AAFX TRADING

Silver on Tuesday made its intraday high of US$15.01/oz and low of US$14.63/oz settled up by 0.948% at US$14.89/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 overbought region and giving negative crossover to show upside move for the intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above, buy above 14.60-13.00 targeting 14.90-15.60-16.10 and 16.70-17.00-17.40; stop breakage below 13.00. Sell below 14.90-17.40 with stop loss above 17.40; targeting 14.40 and 13.90-13.60-13.00.

 
Intraday  Support Levels
S1     14.90-14.40
S2     13.90
S3     13.60-12.90

Intraday  Resistance Levels
R1     15.20-15.60
R2     16.10
R3     16.70-17.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   45.370 Buy
20-DMA   15.13 Sell
50-DMA   15.32 Sell
100-DMA   16.52 Sell
200-DMA   16.96 Sell
STOCH(5,3)   39.268 Buy
MACD(12,26,9)   -0.374 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Tuesday made an intra‐day high of US26.612/bbl, intraday low of US$22.54/bbl and settled up by 15.484% to close at US$26.36/bbl.

Technicals in Focus:

On daily charts, oil is sustaining below its 50DMA i.e. 40.00 which is a resistance level and breakage above will call for 44.00. MACD is below 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 23.50-19.00 with risk daily closing below 19.00 and targeting 24.00-24.70 and 25.80-26.50-28.40. Sell in between 24.00-28.40 with stop loss at 28.40; targeting 23.50-22.55-22.00 and 20.80-20.00-19.00.

 
Intraday Support Levels
S1     24.70
S2     23.50
S3     22.55-22.00

Intraday Resistance Levels
R1     25.80-26.50
R2     28.40
R3     29.00-29.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   54.117 Sell
20-DMA   21.96 Buy
50-DMA   28.01 Sell
100-DMA   42.11 Sell
200-DMA   49.31 Sell
STOCH(5,3)   87.130 Sell
MACD(12,26,9)   -3.0720 Sell

EUR/USD

AAFX TRADING

EUR/USD on Tuesday an intraday low of US$1.0825/EUR, high of US$1.0925/EUR and settled the day down by 0.605% to close at US$1.0839/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1031), which become immediate resistance level, break above will target 1.1090. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in overbought territory and giving positive crossovers to signal for bullish 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 1.0820-1.0570 with risk below 1.0570, targeting 1.0900-1.0970-1.1030 and 1.1060-1.1150. Sell below 1.0900-1.1150 targeting 1.0820-1.0770-1.0700 and 1.0630-1.0570 with stop-loss at daily closing above 1.1100.

 
Intraday Support Levels
S1     1.0820
S2     1.0750
S3     1.0700-1.0630

Intraday  Resistance Levels
R1     1.0900-1.0970
R2     1.1030
R3     1.1060-1.1150

TECHNICAL INDICATORS
Name   Value Action
14DRSI   53.032 Buy
20-DMA   1.0882 Buy
50-DMA   1.0963 Buy
100-DMA   1.1032 Buy
200-DMA   1.1054 Buy
STOCH(5,3)   78.758 Buy
MACD(12,26,9)   -0.0047 Buy

GBP/USD

AAFX TRADING

GBP/USD on Tuesday made an intra‐day low of US$1.2419/GBP, high of US$1.2482/GBP and settled the day down by 0.071% to close at US$1.2433/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 200DMA (1.2647) is become major resistance 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 negative crossover to confirm bearish stance. MACD is above zero line but histograms are increasing lead to upward movement.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; sell below 1.2470-1.2740 with targets at 1.2400-1.2320-1.2250 and 1.2180-1.2130-1.2050 stop-loss should be below 1.2740. Buy above 1.2400-1.2180 with targets 1.2500-1.2590 and 1.2650-1.2700 with stop loss closing below 1.2100.

 
Intraday Support Levels
S1     1.2400-1.2320
S2     1.2240
S3     1.2165-1.2100

Intraday Resistance Levels
R1     1.2470--1.2500
R2     1.2590
R3     1.2645-1.2700

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

50.554

Buy
20-DMA   1.2439 Buy
50-DMA   1.2426 Sell
100-DMA   1.2735 Sell
200-DMA   1.2643 Sell
STOCH(5,3)   54.940 Sell
MACD(12,26,9)   -0.0305 Sell

USD/JPY

AAFX TRADING

USD/JPY on Monday made intra‐day low of JPY106.62/USD and made an intraday high of JPY107.06/USD and settled the day down by 0.0271% at JPY106.67/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (108.30), 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 neutral territory and signaling to sell as it has given negative crossover to confirm bearish stance.

Trading Strategy: Neutral to Sell

Sell below 106.90-110.50 with risk above 110.50 targeting 106.20-105.60-105.00 and 104.30. Long positions above 106.90-105.00 with targets of 106.90-107.50-108.30 and 109.40-110.20-110.90 with stop below 105.00.

 
Intraday Support Levels
S1     106.20
S2     105.60-105.00
S3     104.30

INTRADAY RESISTANCE LEVELS
R1     106.90-107.50
R2     108.30
R3     109.40-110.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   52.904 Buy
20-DMA   108.23 Buy
50-DMA   108.75 Sell
100-DMA   108.95 Sell
200-DMA   108.31 Buy
STOCH(9,6)   52.253 Sell
MACD(12,26,9)   -0.161 Sell

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