AAFX TRADING

Daily Market Lookup

  • The U.S. dollar posted gains in early European trade Thursday, as investors digested the latest downbeat comments from the Federal Reserve, while Asian data offered no real recovery clues. Earlier Thursday, a trade report from South Korea, a bellwether for global commerce, showed exports may be set to drop more than 20% in May for a second month. Meanwhile, Japan’s overseas shipments also plunged by more than a fifth in April and a purchasing managers index showed manufacturing activity weakening further in May. Adding to this, Federal Reserve members said the impact of the coronavirus would "weigh heavily on growth in the near term, and posed considerable downside risks to the economic outlook over the medium term," according to the minutes of their April meeting out Wednesday. An air of positivity had returned to the market as countries started to reopen their economies, but the wary nature of these comments coupled with the disappointing data served to hit risk appetite, sending buyers back to the safe haven U.S. dollar. Attention will now turn to the release of the key weekly U.S. jobless claims figures, at 8:30 AM ET (12:30 GMT), with economists looking for a dip from last week, but a slight one as companies are still forced to shed jobs. Claims for first-time unemployment benefits are expected to come in at 2.4 million, compared with nearly 3 million the week before. Elsewhere, sterling has continued to weaken, weighed by apparent difficulties in Brexit trade negotiations with the EU as well as the prospect of negative interest rates given the likely depth of the economic slowdown ahead. U.K. Chancellor Rishi Sunak warned earlier this week that the country faced a “severe recession, the likes of which we haven't seen.” And that was before the country’s inflation rate fell to 0.8% in April, its lowest since August 2016. Elsewhere, central banks in Turkey and South Africa are both scheduled to hold policy meetings later Thursday and both are expected to cut rates again despite the heavy losses their currencies have recently endured. Analyst polls predict South Africa will cut its 4.25% main rate by another 50 basis points, while Turkey’s central bank will likely cut another 50-100 basis points off its 8.75% repo rate. The dollar was up on Thursday morning in Asia, gaining back some of its losses from earlier in the session. Earlier, positive investor sentiment about the global economic recovery from the COVID-19 virus soured as investors digested a grim report from the U.S. Federal Reserve as it released its Federal Open Market Committee meeting minutes overnight. The minutes warned that the COVID-19 virus posed both a severe economic threat and a risk to financial stability, but also hinted at more stimulus measures for economic recovery. U.S. Secretary of State Mike Pompeo said that the $2 billion pledged by Beijing to fight the virus is “paltry compared to the cost that they have imposed on the world.” Meanwhile, Chinese relations with both the U.S. and Australia continue to simmer in the background as the two countries join a growing group looking to probe the origins of COVID-19 and China's handling of the virus.
  • The dollar nursed broad losses on Thursday and riskier currencies held gains as investors looked to a bright recovery from the COVID-19 pandemic, shrugging off diabolical forecasts and rising Sino-U.S. tension. Both the Aussie and the kiwi were lower in morning trade, but moves were slight as markets await a speech from Australia's central bank chief at 0230 GMT and purchasing manager surveys in Britain, Europe and the United States later on. Japan's flash purchasing managers' index on Thursday showed manufacturing activity slumping again in May. Overnight, traders interpreted economic outlook downgrades in the U.S. Federal Reserve's April meeting minutes as likely to herald more stimulus, pushing stocks higher. The euro (EUR=) hit its highest in three weeks, the Swiss franc its highest in two weeks and the Chinese yuan its highest in one week, while emerging market currencies also surged. U.S. Secretary of State Mike Pompeo called the $2 billion that Beijing has pledged to fight the pandemic "paltry compared to the cost that they have imposed on the world." The exception to the broad dollar weakness was the British pound, which remains under pressure following inflation data that fuelled more speculation the Bank of England would cut interest rates below zero.
  • Oil prices edged higher on Thursday after data showed U.S. crude inventories fell again, easing concern about a supply glut, though lingering fears over the global economic fallout from the COVID-19 pandemic capped gains. U.S. crude inventories fell by 5 million barrels last week, against expectations in a Reuters poll for a 1.2 mn-barrel rise, EIA data showed, while stocks at the Cushing, Oklahoma, delivery hub dropped by 5.6 million barrels. Prices have been boosted lately by shipping data showing the Organization of the Petroleum Exporting Countries, Russia and other allies, a group known as OPEC+, are complying with their pledge to cut 9.7 mn bpd. OPEC itself is encouraged by the rally in prices and strong adherence to output cut pledges, its secretary general said, although sources say the group has not ruled out further steps to support the market. Still, lingering concerns about the economic fallout from the pandemic, especially in the United States, the world's biggest oil consumer, have applied downward pressure on prices. Federal Reserve policymakers repeated a vow to take all steps necessary to shore up the U.S. economy, minutes from the U.S. central bank's April 28-29 policy meeting released on Wednesday showed.

 

 
Intraday RESISTANCE LEVELS
21st May 2020 R1 R2 R3
GOLD-XAU 1,740-1,748 1,755 1,766-1,774
Silver-XAG 17.60-18.00 18.40 18.95-19.50
Crude Oil 35.20-36.00 36.60 37.50-38.40
EURO/USD 1.0970 1.1030 1.1060-1.1150
GBP/USD 1.2260-1.2320 1.2410 1.2470-1.2500
USD/JPY Intraday Resistance Levels R1 107.80-108.30 109.40 110.20-111.00

Intraday SUPPORTS LEVELS
21st May 2020 S1 S2 S3
GOLD-XAU 1,729 1,720-1,709 1,700
Silver-XAG 16.10 16.10 15.60-15.20
Crude Oil 33.00-32.25 31.00 30.50-29.90
EURO/USD 1.0900-1.0800 1.0750 1.0700-1.0630
GBP/USD 1.2165 1.2100 1.2060-1.2010
USD/JPY 106.90-106.20 105.60 105.00-104.30

Intra-Day Strategy (21st 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$1753.79/oz and low of US$1741.90/oz. Gold up 0.211% at US$1747.09/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 1729-1700 with risk below 1700, targeting 1740-1748-1754 and 1766-1774-1789. Sell below 1740-1775 keeping stop loss closing above 1775, targeting 1729-1720 and 1700-1690.

 
Intraday Support Levels
S1     1,729
S2     1,720-1,709
S3     1,700
Intraday Resistance Levels
R1     1,740-1,748
R2     1,755
R3     1,766-1,774

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 Wednesday made its intraday high of US$17.61/oz and low of US$17.24/oz settled up by 1.100% at US$17.53/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 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     16.10
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 Wednesday made an intra‐day high of US33.79/bbl, intraday low of US$31.61/bbl and settled up by 4.793% to close at US$33.47/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 33.00-30.50 with risk daily closing below 26.50 and targeting 35.20-36.00-36.60 and 37.50-38.40. Sell in between 35.20-38.40 with stop loss at 38.20; targeting 30.50-29.90-28.40 and 26.50-25.80.

 
Intraday Support Levels
S1     33.00-32.25
S2     31.00
S3     30.50-29.90

Intraday Resistance Levels
R1     35.20-36.00
R2     36.60
R3     37.50-38.40

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 Wednesday an intraday low of US$1.0916/EUR, high of US$1.0998/EUR and settled the day up by 0.511% to close at US$1.0976/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   1.0897 Buy
100-DMA   1.0970 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 Wednesday made an intra‐day low of US$1.2220/GBP, high of US$1.2286/GBP and settled the day up by 0.463% to close at US$1.2230/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     1.2165
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 Wednesday made intra‐day low of JPY107.33/USD and made an intraday high of JPY107.97/USD and settled the day down by 0.189% at JPY107.48/USD.

Technicals in Focus:

USD/JPY on Wednesday made intra‐day low of JPY107.33/USD and made an intraday high of JPY107.97/USD and settled the day down by 0.189% at JPY107.48/USD.

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     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   108.22 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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