AAFX TRADING

Daily Market Lookup

  • The U.S. dollar has seen demand in early European trade Thursday, as risk aversion reigned on the back of Federal Reserve Chairman Jerome Powell's sobering outlook for U.S. economic growth and his ruling out of negative interest rates. Powell joined a list of policymakers to fend off the notion of negative U.S. rates in a webcast Wednesday. He also pledged to use the U.S. central bank's power as needed, but suggested that it might not be enough to avoid deep economic damage without more fiscal support. The market is still priced for the Effective Fed Funds rate to dip into negative territory next year, “but his comments could stop the market from pricing an even lower Fed Funds rate,” said analysts at Danske Bank. This additional fiscal support may prove tricky to get through Congress. Earlier this week House Democrats proposed another coronavirus relief bill, worth $3 trillion, which includes funding for state and local governments and more direct stimulus payments for Americans. However, the Republicans have rejected the idea. The latest weekly jobless claims, at 8:30 AM ET (12:30 GMT), could well illustrate the need for more support, with claims for first-time unemployment benefits expected to come in at 2.5 million. This would push the number of people claiming unemployment benefit over the 35 million level since the coronavirus virus first hit. This week Goldman Sachs (NYSE:GS) analysts revised their peak estimate for the U.S. jobless rate to 25%, up from 15%. The April official rate came in at 14.7% last week. The job losses have hit poorer sections of the population hardest: Powell said 40% of families with income below $40,000 a year had lost a job, according to Fed analysis. The other main currency which has gained thanks to this period of risk aversion has been the Japanese yen, and JPMorgan Chase (NYSE:JPM) sees the potential for more strength ahead. The bank cited the return of deflation as a mounting concern in Japan, as well as record outflows of portfolio capital slowing as Japanese fund managers confront much lower bond yields abroad. Additionally, Japan’s trade balance may get a sustained boost from the drop in oil prices. Elsewhere, sterling fell to a seven-week low amid growing fears that the Bank of England too will be forced to resort to negative rates. Fears of a hard Brexit at the end of the year when the current transition period ends out are also weighing in a country that now has the highest virus death toll in Europe.
  • Oil was mixed on Thursday morning in Asia, with dark clouds on the horizon for the black liquid despite a decrease in inventories. The U.S. Energy Information Administration (EIA) reported a 745,000-million-barrel decrease in U.S. crude inventories overnight, the first decline since January. Analyst forecasts prepared by Investing.com predicted an increase for 4.147 million barrels. The EIA also said that it now expects world oil demand to fall by 8.1 million barrels per day in 2020 to 92.6 million bpd, compared with a previous forecast for a drop of 5.2 million bpd. OPEC also slashed its world oil demand forecast in its monthly report on Wednesday. The organization now expects demand to shrink by 9.07 million bpd this year, compared to its expected contraction 6.85 million bpd last month. A second wave of COVID-19 virus cases in China and South Korea are continuing to raise investor fears that storage tanks will fill up faster than expected as demand shrinks again. Meanwhile, OPEC+ announced that the organization looks to extend existing cuts until the end of the year. Members will cut production by 9.7 million barrels in May and June, with a further 7.7 million bpd cut for the rest of the year. The organization is scheduled to meet next in June, in Vienna. Oil prices crept up on Thursday, supported by a surprise decline of U.S. crude inventories, but gains were capped by worries that a potential second wave of the coronavirus pandemic might trigger fresh lockdowns and slam fuel demand once again. Crude stocks in the United States had billowed since mid-January on falling fuel demand around the world as a result of the pandemic. But U.S. crude inventories fell by 745,000 barrels to 531.5 million barrels in the week to May 8, the Energy Information Administration said on Wednesday, comforting the market after analysts in a Reuters poll had forecast a 4.1 million barrel increase. Prices have risen in the past two weeks as some countries relaxed coronavirus restrictions and lockdowns, giving hope for a pickup in fuel demand. The mood in the market has also been boosted major oil producers' commitments to curb output to help restore supply-demand balance. The Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia agreed in April to curtail their production by 9.7 million barrels per day (bpd) in May and June. Saudi Arabia, de facto leader of OPEC, also said it would cut its oil output by an additional 1 million bpd to 7.5 million bpd starting in June. In Europe, demand for petrol and diesel has begun a slow recovery as governments eased coronavirus curbs and vehicle traffic increased in major cities, according to data provided to Reuters by location technology company TomTom. However, concerns over a possible second wave weighed on prices as new coronavirus cases have emerged in South Korea and China after they softened restrictions.

 

 
Intraday RESISTANCE LEVELS
14th May 2020 R1 R2 R3
GOLD-XAU 1,720 1,729 1,740-1,748
Silver-XAG 15.60 16.10 16.70-17.00
Crude Oil 26.50 28.40 29.00-29.90
EURO/USD 1.0900-1.0970 1.1030 1.1060-1.1150
GBP/USD 1.2320-1.2410 1.2470 1.2500-1.2590
USD/JPY 106.90-07.60 108.30 109.40-110.20

Intraday SUPPORTS LEVELS
14th May 2020 S1 S2 S3
GOLD-XAU 1,709-1700 1,674-1,660 1,674-1,660
Silver-XAG 15.20-14.90 14.40 13.90-13.60
Crude Oil 25.80-25.20 24.00 23.50-22.55
EURO/USD 1.0800-1.0750 1.0700 1.0630-1.0570
GBP/USD 1.2190-1.2165 1.2100 1.2060-1.2010
USD/JPY 106.20 105.60 105.00-104.30

Intra-Day Strategy (14th 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 Wednesday made its intraday high of US$1718.15/oz and low of US$1698.94/oz. Gold down 0.150% at US$1715.66/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 1709-1636 with risk below 1635, targeting 1720-1729 and 1740-1748. Sell below 1720-1760 keeping stop loss closing above 1760, targeting 1700-1690-1674 and 1660-1645.

 
Intraday Support Levels
S1     1,709-1700
S2     1,674-1,660
S3     1,674-1,660
Intraday Resistance Levels
R1     1,720
R2     1,729
R3     1,740-1,748

Technical Indicators

Name   Value Action
14DRSI  

57.609

Buy
20-DMA   1704.45 Buy
50-DMA  

1651.74

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 Wednesday made its intraday high of US$15.63/oz and low of US$15.29/oz settled up by 0.844% at US$15.53/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 15.20-13.00 targeting 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     15.20-14.90
S2     14.40
S3     13.90-13.60

Intraday  Resistance Levels
R1     15.60
R2     16.10
R3     16.70-17.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   56.370 Buy
20-DMA   15.17 Sell
50-DMA   15.01 Sell
100-DMA   16.43 Sell
200-DMA   16.92 Sell
STOCH(5,3)   68.268 Buy
MACD(12,26,9)   -0.374 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Wednesday made an intra‐day high of US26.87/bbl, intraday low of US$25.17/bbl and settled down by 0.236% to close at US$25.78/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 25.80-19.00 with risk daily closing below 19.00 and targeting 26.50-28.40 and 29.00-29.90. Sell in between 26.50-29.90 with stop loss at 30.00; targeting 25.80-25.20-24.70 and 23.50-22.55-22.00.

 
Intraday Support Levels
S1     25.80-25.20
S2     24.00
S3     23.50-22.55

Intraday Resistance Levels
R1     26.50
R2     28.40
R3     29.00-29.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   55.117 Sell
20-DMA   21.36 Buy
50-DMA   25.01 Sell
100-DMA   40.11 Sell
200-DMA   48.31 Sell
STOCH(5,3)   55.130 Sell
MACD(12,26,9)   -3.0720 Sell

EUR/USD

AAFX TRADING

EUR/USD on Wednesday an intraday low of US$1.0810 /EUR, high of US$1.0895/EUR and settled the day down by 0.268% to close at US$1.0817/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     1.0800-1.0750
S2     1.0700
S3     1.0630-1.0570

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

TECHNICAL INDICATORS
Name   Value Action
14DRSI   43.032 Buy
20-DMA   1.0868 Buy
50-DMA   1.0955 Buy
100-DMA   1.0991 Buy
200-DMA   1.1027 Buy
STOCH(5,3)   8.758 Sell
MACD(12,26,9)   -0.0047 Buy

GBP/USD

AAFX TRADING

GBP/USD on Tuesday made an intra‐day low of US$1.2209/GBP, high of US$1.2339/GBP and settled the day down by 0.271% to close at US$1.2223/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 1.2320-1.2740 with targets at 1.2180-1.2130 and 1.2060-1.2010 stop-loss should be below 1.2740. Buy above 1.2320-1.2180 with targets 1.2320-1.2410-1.2470 and 1.2500-1.2590-1.2650 with stop loss closing below 1.2100.

 
Intraday Support Levels
S1     1.2190-1.2165
S2     1.2100
S3     1.2060-1.2010

Intraday Resistance Levels
R1     1.2320-1.2410
R2     1.2470
R3     1.2500-1.2590

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

39.554

Buy
20-DMA   1.2382 Buy
50-DMA   1.2337 Sell
100-DMA   1.2673 Sell
200-DMA   1.2649 Sell
STOCH(5,3)   5.940 Sell
MACD(12,26,9)   -0.0305 Sell

USD/JPY

AAFX TRADING

USD/JPY on Wednesday made intra‐day low of JPY106.73/USD and made an intraday high of JPY107.27/USD and settled the day down by 0.088% at JPY107.01/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
S3     105.00-104.30

INTRADAY RESISTANCE LEVELS
R1     106.90-07.60
R2     108.30
R3     109.40-110.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   47.904 Buy
20-DMA   107.10 Buy
50-DMA   107.55 Sell
100-DMA   108.51 Sell
200-DMA   108.22 Buy
STOCH(9,6)   70.253 Sell
MACD(12,26,9)   -0.161 Sell

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