AAFX TRADING

Daily Market Lookup

  • The dollar was on the defensive on Tuesday as investors stuck to hopes of a global economic recovery despite heightened concerns over U.S.-China tensions and mass protests in many U.S. cities over the death of a black man in police custody. U.S. manufacturing activity eased off an 11-year low in May and although the reading was weaker than forecast, it fit into markets' expectations that the worst of the economic downturn was behind as businesses reopen. President Donald Trump said on Monday he was deploying thousands of heavily armed soldiers and law enforcement to halt violence in the U.S. capital and vowed to do the same in other cities if mayors and governors fail to regain control of the streets. The protests erupted over the death of George Floyd, a 46-year-old African-American who died in Minneapolis police custody after being pinned beneath a white officer's knee for nearly nine minutes. Market risk sentiment was hurt only slightly on Monday when Bloomberg reported that China had told state-owned firms to halt purchases of soybeans and pork from the United States, raising concerns that the trade deal between the world's two biggest economies could be in jeopardy. The Reserve Bank of Australia is expected to keep rates on hold when it meets later on Tuesday. Even with the risk of a hard Brexit hanging over their heads, pound traders seem to be looking the other way. The currency touched a three-week high against a weaker dollar, one day before fraught trade negotiations resume between London and Brussels. A gauge of sentiment in sterling over the next month, which covers the deadline for an extension to the U.K.’s Brexit transition period, is the least negative since late March. It’s a sign Brexit has lost some of its power to rattle investors, as concerns shift to the economic impact of the coronavirus pandemic and the possibility of a second wave of outbreaks after the U.K.’s lockdown eases. Few analysts expect a political breakthrough this week. There could be damaging headlines for the process in coming days after the bloc’s chief negotiator Michel Barnier told the Sunday Times the U.K. needs to be “more realistic” in its demands. Still, there’s been no spike in the cost of insuring against a swing in the pound against the dollar in options. For the next month, it’s hovering near the lowest level since early May. That contrasts with the roller-coaster ride suffered by the pound throughout 2019 on fears of a no-deal Brexit and turmoil in Parliament. Traders have stopped hanging on the words of lawmakers and are instead scrutinizing comments from Bank of England policy makers on the possibility of negative interest rates, which have weighed on the currency. It also narrowed the spread between 10-year gilt and bund yields to the smallest gap since since 2016. Negative rates may become unavoidable especially if there is a no-deal Brexit at the end of the year, said Christian Schulz, director of European research. Such a move by the BOE could lead the pound to revisit 35-year lows hit in March, according to Lee Hardman, a foreign-exchange strategist at MUFG. Investors are betting the U.K. will join the negative-rates club by the end of February, according to overnight interest-rate swaps. Last month, the market saw such a move in November this year.
  • Oil was mixed on Tuesday morning in Asia, with caution over mounting U.S.-China tensions mingling with optimism over the possibility of an extension of OPEC production cuts. Investor caution remained after the Chinese government told state-owned traders Cofco and Sinograin on Monday to halt purchases of American soybeans and other U.S. agricultural goods. It was also reported that Chinese buyers also cancelled some U.S. pork orders. These actions put a hard-won phase one of the U.S.-China trade deal, as well as the fragile demand recovery for the black liquid, in jeopardy with tensions between the two countries continuing to mount. Meanwhile, investors are waiting to see whether OPEC will extend the timeframe of its production cuts, which have been in place since May, into July or even August. An extension of the cuts would prevent a supply glut, with demand recovery sluggish even though more countries are loosening lockdowns and re-opening their economies. The body will make the decision when it meets online later in the week. Russian oil and gas condensate production fell to 39.7 mn tonnes (9.39 mn bpd) in May, near its target under a deal within the OPEC+ group, Interfax news agency reported on Tuesday, citing energy ministry data. The figure was in line with data from sources, reported by Reuters on Monday, and down from 11.35 mn bpd in April. Under the agreement between Russia and OPEC, a group known as OPEC+, Moscow has pledged to reduce its output by around 2.5 mn bpd to 8.5 million bpd to help support oil prices. The deal does not include output of gas condensate, light oil. Russia usually produces 700,000-800,000 bpd of gas condensate. That means that excluding gas condensate, Russia produced 8.59-8.69 mn bpd of crude oil in May. The ministry does not disclose gas condensate output on a monthly basis separately. Interfax also said that Russian oil exports outside former Soviet Union in May reached 17.36 mn tonnes, or 4.1 mn bpd, down 14.2% year-on-year. OPEC+ agreed to cut its combined output by around 10 million bpd, or 10% of global oil production, in May and June, with a subsequent easing of the reductions, to tackle economic fallout from the corona virus pandemic. OPEC+ may hold an online conference as early as Thursday to discuss its policy, compared with the original schedule of next week.

 

 
Intraday RESISTANCE LEVELS
2nd June 2020 R1 R2 R3
GOLD-XAU 1,740-1,748 1,755 1,765-1,770
Silver-XAG 18.55-18.95 19.60 20.10-20.50
Crude Oil 36.10 36.60-37.10 38.00
EURO/USD 1.1150-1.1200 1.1235 1.1300
GBP/USD 1.2550-1.2600 1.2650 1.2720-1.2800
USD/JPY 107.90-108.40 109.40 110.20-111.00

Intraday SUPPORTS LEVELS
2nd June 2020 S1 S2 S3
GOLD-XAU 1,732-1,709 1,700 1,690-1,675
Silver-XAG 18.00-17.60 16.90 16.50-16.10
Crude Oil 35.20-34.00 32.90 32.05-31.00
EURO/USD 1.1060-1.1030 1.0970 1.0900-1.0800
GBP/USD 1.2470-1.2410 1.2350 1.2250-1.2165
USD/JPY 107.10-106.20 105.60 105.00-104.30

Intra-Day Strategy (2nd June 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 Friday made its intraday high of US$1742.66/oz and low of US$1734.96/oz. Gold up 0.131% at US$1736.69/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 1720-1660 with risk below 1660, targeting 1740-1748-1754 and 1765-1772. Sell below 1740-1772 keeping stop loss closing above 1772, targeting 1720-1700-1690 and 1674-1660.

 
Intraday Support Levels
S1     1,732-1,709
S2     1,700
S3     1,690-1,675
Intraday Resistance Levels
R1     1,740-1,748
R2     1,755
R3     1,765-1,770

Technical Indicators

Name   Value Action
14DRSI  

52.982

Buy
20-DMA   1717.47 Buy
50-DMA  

1678.93

Buy
100-DMA   1632.40 Buy
200-DMA   1563.70 Buy
STOCH(5,3)   28.621 Sell
MACD(12,26,9)   -2.894 Sell

Silver - XAG

AAFX TRADING

Silver on Monday made its intraday high of US$18.37/oz and low of US$18.12/oz settled up by 0.730% at US$17.85/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 18.00-16.10 targeting 17.60-18.00 and 18.40-18.95; stop breakage below 15.00. Sell below 18.55-20.95 with stop loss above 21.00; targeting 18.00-17.60-16.90 and 16.50-16.10-15.60.

 
Intraday  Support Levels
S1     18.00-17.60
S2     16.90
S3     16.50-16.10

Intraday  Resistance Levels
R1     18.55-18.95
R2     19.60
R3     20.10-20.50

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 Monday made an intra‐day high of US36.16/bbl, intraday low of US$35.30/bbl and settled up by 1.77% to close at US$36.08/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 35.20-31.00 with risk daily closing below 31.00 and targeting 36.00-36.60 and 37.10-37.70. Sell in between 35.20-37.70 with stop loss at 37.70; targeting 35.20-34.00-33.00 and 32.25-31.00-30.50.

 
Intraday Support Levels
S1     35.20-34.00
S2     32.90
S3     32.05-31.00

Intraday Resistance Levels
R1     36.10
R2     36.60-37.10
R3     38.00

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 Monday an intraday low of US$1.1095/EUR, high of US$1.1155/EUR and settled the day up by 0.197% to close at US$1.1135/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 1.1060-1.0800 with risk below 1.0630, targeting 1.1150-1.1200 and 1.1235-1.1300. Sell below 1.1150-1.1300 targeting 1.1060-1.1030-1.0900 and 1.0820-1.0770-1.0700 with stop-loss at daily closing above 1.1100.

 
Intraday Support Levels
S1     1.1060-1.1030
S2     1.0970
S3     1.0900-1.0800

Intraday  Resistance Levels
R1     1.1150-1.1200
R2     1.1235
R3     1.1300

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 Friday made an intra‐day low of US$1.2322/GBP, high of US$1.2507/GBP and settled the day up by 1.256% to close at US$1.2494/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 1.2550 with targets at 1.2500-1.2410-1.2320 and 1.2250-1.2165-1.2100 stop-loss should be 1.2600. Buy above 1.2470-1.2060 with targets 1.2550-1.2600 and 1.2650-1.2700 with stop loss closing below 1.2700.

 
Intraday Support Levels
S1     1.2470-1.2410
S2     1.2350
S3     1.2250-1.2165

Intraday Resistance Levels
R1     1.2550-1.2600
R2     1.2650
R3     1.2720-1.2800

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

47.554

Buy
20-DMA   1.2308 Buy
50-DMA   1.2270 Sell
100-DMA   1.2600 Sell
200-DMA   1.2650 Sell
STOCH(5,3)   44.940 Sell
MACD(12,26,9)   -0.0305 Sell

USD/JPY

AAFX TRADING

USD/JPY on Monday made intra‐day low of JPY107.52/USD and made an intraday high of JPY107.84/USD and settled the day down by 0.204% at JPY107.78/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     107.10-106.20
S2     105.60
S3     105.00-104.30

INTRADAY RESISTANCE LEVELS
R1     107.90-108.40
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
AAFX TRADING AAFX TRADING AAFX TRADING AAFX TRADING AAFX TRADING AAFX TRADING AAFX TRADING AAFX TRADING AAFX TRADING