AAFX TRADING

Daily Market Lookup

  • The dollar ended the week on a high note on Friday, with investors turning to the safe-haven dollar as simmering U.S.-China tensions flared up. The greenback was boosted by reports on Thursday that China was planning controversial national security laws for Hong Kong in the aftermath of pro-democracy protests in the city in the second half of 2019. Chinese Premier Li Keqiang said during the opening session for the National People’s Congress earlier in the day, “We will establish sound legal systems and enforcement mechanisms for safeguarding national security in the two special administrative regions and see that the governments of the two regions fulfill their constitutional responsibilities.” The plans drew an immediate response from the United States, with President Donald Trump saying the United States will react strongly if China imposes the laws, and two U.S. senators were preparing a bill imposing sanctions on entities involved in upholding the law. Japan reported on Friday that its April core consumer prices fell for the first time in more than three years year-on-year, with deflation risks heightened by weak oil prices and COVID-19 lockdown measures. On the same day, the Bank of Japan launched a new lending facility aiming to channel more funds to small-and-medium-sized businesses to cushion COVID-19's economic blow. It also extended the deadline for a series of other COVID-19-combatting measures, including accelerated corporate debt buying, by six months. Meanwhile, monetary settings, including the short-term interest rate target of -0.1% and a pledge to guide the 10-year government bond yield around 0%, remain unchanged.
  • The dollar held gains against major currencies on Friday as worries about renewed diplomatic tensions between the United States and China supported safe-haven demand for the greenback. The yuan nursed losses in offshore trade, but further declines may be limited in the local session on Friday as Chinese officials are expected to unveil new economic stimulus measures. Sino-U.S. relations have soured yet again over a broad range of issues, including China's treatment of the former British colony of Hong Kong and its response to the coronavirus pandemic, which is causing risk aversion to spread. Sterling held steady at $1.2227 before data later on Friday expected to show a plunge in British retail sales. China is set to impose new national security legislation on Hong Kong after last year's pro-democracy unrest, a Chinese official said on Thursday. U.S. President Donald Trump has warned that Washington would react "very strongly" to the legislation. There is a risk that Hong Kong could lose some of its favourable U.S. trading terms that have helped it maintain its position as a global financial centre. Washington and Beijing are also at loggerheads over Chinese companies' access to advanced technology and criticism of Beijing's response after the novel coronavirus emerged late last year in the central Chinese province of Hubei. The friction stirs memories of last year's drawn-out trade war between the United States and China, which roiled global financial markets. The focus is on whether the yuan extends declines in onshore trade today. Chinese Premier Li Keqiang is expected to unveil stimulus measures when the National People's Congress starts on Friday to spur its economy, which has been battered by the coronavirus. Elsewhere, the yen held steady at 107.63 per dollar. The Bank of Japan will hold an emergency meeting later on Friday to decide the details of a lending scheme for small companies hurt by the pandemic.
  • Oil dipped on Friday morning in Asia, giving up its earlier gains after China failed to set its annual economic growth target. Although the government failed to set the 2020 target, it pledged to issue CNY 1 trillion ($140.67 billion) of special treasury bonds to support regions hard hit by the virus. China’s abandonment of the growth target, breaking years of tradition, "could be interpreted as putting less focus on infrastructure investment and could be viewed as negative for oil," Stephen Innes, chief global market strategist at AxiCorp, told Reuters. But with OPEC+ and other producers adhering to pledged production cuts, and countries emerging from lockdowns, there are hopes that the black liquid will continue into a fourth week of gains. Gasoline demand is expected to increase in the United States, with more states loosening lockdowns and the upcoming Memorial Day weekend kicking off the summer driving season. Oil headed for a fourth week weekly gain as production cuts and a nascent recovery in demand kept chipping away at the supply glut. U.S. drillers are in the process of curtailing 1.75 million barrels a day of existing production by early June, IHS Markit said. That’s on top of OPEC+’s agreement to curb almost 10 million barrels a day of output, which is being strictly adhered to after taking effect at the start of May. The cuts are eroding the stockpiles built up amid coronavirus lockdowns and the price war, with inventories at the U.S. storage hub at Cushing, Oklahoma, shrinking by the most on record last week. Meanwhile, demand in China, the world’s biggest crude importer, is almost back to pre-virus levels, while economic activity is starting to recover in parts of Europe and North America. Oil’s 80% surge this month has taken many in the market by surprise, especially given that the path back to a full economic recovery looks to be long and uncertain and the risk of a second wave of the virus can’t be discounted. It’s also raised the possibility that American shale producers will slowly start to turn on the taps again and that the strict compliance with the OPEC+ agreement might break down.

 

 
Intraday RESISTANCE LEVELS
22nd 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 32.25-33.00 35.20 36.00-36.60
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
22nd May 2020 S1 S2 S3
GOLD-XAU 1,729 1,720-1,709 1,700
Silver-XAG 16.90-16.50 16.10 15.60-15.20
Crude Oil 31.00-30.50 29.90 29.00-27.70
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 (22nd 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 Thursday made its intraday high of US$1748.66/oz and low of US$1717.01/oz. Gold down 1.128% at US$1726.88/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 Thursday made its intraday high of US$17.53/oz and low of US$16.84/oz settled down by 2.63% at US$17.07/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 Thursday made an intra‐day high of US34.69/bbl, intraday low of US$33.33/bbl and settled up by 1.025% to close at US$33.88/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 31.00-27.70 with risk daily closing below 26.50 and targeting 32.25-33.0-00-35.20 and 36.00-36.60. Sell in between 32.20-36.60 with stop loss at 36.60; targeting 31.00-30.50-29.90 and 28.40-27.70-26.50.

 
Intraday Support Levels
S1     31.00-30.50
S2     29.90
S3     29.00-27.70

Intraday Resistance Levels
R1     32.25-33.00
R2     35.20
R3     36.00-36.60

TECHNICAL INDICATORS
Name   Value Action
14DRSI   64.117 Sell
20-DMA   22.13 Buy
50-DMA   24.89 Sell
100-DMA   38.40 Sell
200-DMA   47.45 Sell
STOCH(5,3)   82.130 Sell
MACD(12,26,9)   -3.0720 Sell

EUR/USD

AAFX TRADING

EUR/USD on Thursday an intraday low of US$1.0936/EUR, high of US$1.1007/EUR and settled the day down by 0.265% to close at US$1.0947/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 Thursday made an intra‐day low of US$1.2184/GBP, high of US$1.2248/GBP and settled the day down by 0.134% to close at US$1.2350/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 Thursday made intra‐day low of JPY107.38/USD and made an intraday high of JPY107.97/USD and settled the day down by 0.189% at JPY107.59/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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