AAFX TRADING

Daily Market Lookup

  • The U.S. dollar pushed higher in early European trade Wednesday amid doubts over a potential vaccine for the Covid-19 virus, but it’s been the euro which has shone the brightest as the Franco-German proposal for a common EU recovery fund gains traction. Investors turned to the safe-haven dollar after the report deflated hopes of a potential cure for the virus. However, the dollar hasn’t been able to make any gains against the euro, with the single currency still basking in the glow of the joint proposal by France and Germany of a European recovery fund. This fund, totalling 500 billion euro ($545 billion), would be distributed to EU countries worst affected by Covid-19, with the monies provided as grants rather than loans. The proposal will undoubtedly face opposition from some of the wealthier EU members, but is being seen as a significant step toward a stronger common fiscal policy, complementing the euro’s monetary foundations. Sterling remains under pressure after U.K. Chancellor Rishi Sunak warned the country faced a “severe recession, the likes of which we haven't seen.” Adding to the pessimism surrounding the economic woe have been fraught negotiations with the EU over a potential trade deal. Bank of England Governor Andrew Bailey is due to speak at 9:30 AM ET, amid strong speculation that the Bank will cut its key interest rate below zero at its next policy meeting. USD/CNY was up 0.1% to 7.1040, after China's central bank announced earlier in the day that it would not change its loan prime rates, in line with investor expectations. Meanwhile, the Russian ruble hit a two-month high against the dollar as oil prices recovered further. The dollar rose on Wednesday morning in Asia after a report casted doubt on a potential vaccine for the COVID-19 virus. The report said that the U.S. drug maker had provided insufficient data to determine the vaccine’s efficacy. Investors turned to the safe-haven dollar after the report deflated hopes of a potential cure for the virus. The Reuters Tankan survey showed that Japanese business confidence hit decade lows in May, as firms braced for a protracted period of economic turmoil due to COVID-19. Meanwhile, U.S.-China tensions continue to simmer in the background.
  • Asian stocks struggled to extend the week’s rally on Wednesday, and gold and bonds firmed, as a sceptical press report dented some hopes for a COVID-19 vaccine and concerns about the global recovery from the pandemic returned. The report said the results, which had rallied global stocks this week, lacked detail. Doubts about the outlook held back commodity prices from further gains, as more bad news poured forth. Japanese business confidence slumped to a decade low as the economy entered recession while Australian retail sales suffered their steepest ever dive in April. British jobless claims are at their highest in 20 years. And the U.S. economy won’t recover its lost ground until sometime after next year, the non-partisan Congressional Budget Office said on Tuesday.
  • Oil gained in a day of choppy trading as investors weighed supply cuts and a demand rebound against an ominous economic outlook from the Federal Reserve. West Texas Intermediate crude for July delivery rose 1%. Output cuts by the world’s largest producers are whittling down a supply glut while oil consumption is recovering as economies around the globe emerge from lockdowns. Citigroup Inc (NYSE:C). said the oil surplus weighing on the market in the second quarter is expected to turn into a record deficit in the third. But investors were disheartened by bearish remarks from Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin on Tuesday. The head of the central bank told a Senate committee that Americans could start losing their homes and warned that long-term unemployment can damage the economy. WTI futures for June also rose ahead of its expiry on Tuesday. In another indication that the market is finding a new equilibrium, WTI crude for June delivery traded at a premium to the July contract. The structure, known as backwardation, suggests concerns about storage capacity at the key hub in Cushing, Oklahoma, have eased. An American Petroleum Institute report showed that supplies in Cushing, Oklahoma, fell by 5.04 million barrels last week, according to people familiar. U.S. crude stockpiles fell 4.84 million barrels, according to the report. To add to that, Shale oil output from the U.S., the world’s biggest producer, is forecast to fall next month to the lowest since late 2018, according to the Energy Information Administration. There’s also been a “stunning reversal” in OPEC+ shipments in May, data intelligence firm Kpler said, after the alliance’s deal to curb production kicked in at the beginning of the month. Powell said the central bank is ready to use all tools available to help the U.S. economy endure the coronavirus pandemic, and Mnuchin said he sees the economy improving in the second half of this year.

 

 
Intraday RESISTANCE LEVELS
20th May 2020 R1 R2 R3
GOLD-XAU 1,755-1,766 1,774 1,789-1,800
Silver-XAG 17.60-18.00 18.40 18.95-19.50
Crude Oil 32.25 33.00 35.20-36.00
EURO/USD 1.0970 1.1030 1.1060-1.1150
GBP/USD 1.2260-1.2320 1.2410 1.2470-1.2500
USD/JPY 107.80-108.30 109.40 110.20-111.00

Intraday SUPPORTS LEVELS
20th May 2020 S1 S2 S3
GOLD-XAU 1,748-1,740 1,729 1,720-1,709
Silver-XAG 16.90-16.50 16.10 15.60-15.20
Crude Oil 31.00-30.50 29.90 29.00-28.40
EURO/USD 1.0900-1.0800 1.0750 1.0700-1.0630
GBP/USD 1.2210-1.2165 1.2100 1.2060-1.2010
USD/JPY 106.90-106.20 105.60 105.00-104.30

Intra-Day Strategy (20th 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$1747.76/oz and low of US$1725.45/oz. Gold up 0.694% at US$1743.87/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 1748-1700 with risk below 1700, targeting 1754-1766 and 1774-1789-1800. Sell below 1760-1800 keeping stop loss closing above 1800, targeting 1748-1740-1729 and 1720-1700-1690.

 
Intraday Support Levels
S1     1,748-1,740
S2     1,729
S3     1,720-1,709
Intraday Resistance Levels
R1     1,755-1,766
R2     1,774
R3     1,789-1,800

Technical Indicators

Name   Value Action
14DRSI  

59.609

Buy
20-DMA   1712.90 Buy
50-DMA  

1655.12

Buy
100-DMA   1617.74 Buy
200-DMA   1555.05 Buy
STOCH(5,3)   19.621 Sell
MACD(12,26,9)   -27.894 Sell

Silver - XAG

AAFX TRADING

Silver on Tuesday made its intraday high of US$17.47/oz and low of US$16.92/oz settled up by 2.237% at US$17.32/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 16.90-15.00 targeting 17.60-18.00 and 18.40-18.95; stop breakage below 15.00. Sell below 17.60-18.95 with stop loss above 18.50; targeting 16.90-16.50-16.10 and 15.60-14.40.

 
Intraday  Support Levels
S1     16.90-16.50
S2     16.10
S3     15.60-15.20

Intraday  Resistance Levels
R1     17.60-18.00
R2     18.40
R3     18.95-19.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   75.370 Buy
20-DMA   15.36 Sell
50-DMA   14.88 Sell
100-DMA   16.35 Sell
200-DMA   16.91 Sell
STOCH(5,3)   96.268 Buy
MACD(12,26,9)   -0.374 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Tuesday made an intra‐day high of US32.91/bbl, intraday low of US$31.15/bbl and settled up by 1.593% to close at US$31.80/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 30.50-26.50 with risk daily closing below 26.50 and targeting 31.00-32.35 and 33.00-34.00-35.20. Sell in between 31.00-35.20 with stop loss at 35.20; targeting 30.50-29.90-28.40 and 26.50-25.80.

 
Intraday Support Levels
S1     31.00-30.50
S2     29.90
S3     29.00-28.40

Intraday Resistance Levels
R1     32.25
R2     33.00
R3     35.20-36.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   64.117 Sell
20-DMA   22.13 Buy
50-DMA   24.89 Sell
100-DMA   39.40 Sell
200-DMA   47.88 Sell
STOCH(5,3)   95.130 Sell
MACD(12,26,9)   -3.0720 Sell

EUR/USD

AAFX TRADING

EUR/USD on Tuesday an intraday low of US$1.0901/EUR, high of US$1.0975/EUR and settled the day up by 0.939% to close at US$1.0921/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 1.0900-1.0630 with risk below 1.0630, targeting 1.0970-1.1030 and 1.1060-1.1150. Sell below 1.0970-1.1150 targeting 1.0900-1.0820-1.0770-1.0700 and 1.0630-1.0570 with stop-loss at daily closing above 1.1100.

 
Intraday Support Levels
S1     1.0900-1.0800
S2     1.0750
S3     1.0700-1.0630

Intraday  Resistance Levels
R1     1.0970
R2     1.1030
R3     1.1060-1.1150

TECHNICAL INDICATORS
Name   Value Action
14DRSI   44.032 Buy
20-DMA   1.0851 Buy
50-DMA   1.0970 Buy
100-DMA   1.1015 Sell
200-DMA   1.1015 Sell
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$1.2183/GBP, high of US$1.2295/GBP and settled the day up by 0.463% to close at US$1.2250/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 1.2100-1.2470 with targets at 1.2100-1.2060-1.2010 and 1.1955-1.1900 stop-loss should be below 1.2470. Buy above 1.2100-1.1900 with targets 1.2165-1.2210-1.2320 and 1.2410-1.2470-1.2500 with stop loss closing below 1.2100.

 
Intraday Support Levels
S1     1.2210-1.2165
S2     1.2100
S3     1.2060-1.2010

Intraday Resistance Levels
R1     1.2260-1.2320
R2     1.2410
R3     1.2470-1.2500

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 Tuesday made intra‐day low of JPY107.24/USD and made an intraday high of JPY108.08/USD and settled the day up by 0.372% at JPY107.69/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 107.90-110.50 with risk above 110.50 targeting 106.90-106.20-105.60 and 105.00-104.30. 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     106.90-106.20
S2     105.60
S3     105.00-104.30

INTRADAY RESISTANCE LEVELS
R1     107.80-108.30
R2     109.40
R3     110.20-111.00

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

AAFX TRADING
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