AAFX TRADING

Daily Market Lookup

  • A rebound in the dollar faltered on Tuesday as political wrangling over a U.S. relief plan and the gloomy economic outlook kept investors shy of the currency. After its worst month in a decade in July the greenback started August on a firm note as some investors trimmed their short positions, pushing the currency as high as $1.1695 per euro on Monday, 1.8% above last week's two-year low. Despite an encouraging slowdown in new virus cases and better-than-expected manufacturing data, investors are reserving judgment on whether a U.S. economy with 30 million people out of work can really lead the world's recovery. Top Democrats in Congress and White House negotiators on Monday said they had made headway in talks on the latest coronavirus relief bill, though an expired $600-per-week unemployment benefit remains a sticking point. It is not clear whether an agreement would be enough to shift the market perception that the U.S. economic recovery lagged those of Europe and Asia. A better-than-expected expansion in the Institute for Supply Management's U.S. manufacturing index was a bright spot for the dollar overnight. But it came with a warning as output remains far below pre-virus levels and the employment index was below forecasts, at a still contractionary 44.3. The United States had a second straight week of slowing infections last week, but a fourth week in a row of rising deaths, a Reuters analysis found, as new hotspots emerge there and around the globe. Cases are on the march again in Europe while Australia's second-biggest city of Melbourne announced a curfew and fresh restrictions on movement to suppress an outbreak there. Elevated Sino-U.S. tension kept the yuan on the weaker side of 7-per-dollar at 6.9806 in onshore trade.
  • The U.S. dollar rose on Monday, looking to get the new month off on a solid footing, but optimism on Wall Street for a prolonged recovery appears unlikely as analysts warn dark days will return. The dollar's positive start to the week was helped by better-than-expected manufacturing data. After falling 5.5% in July, the dollar's path ahead is likely lower as the negative forces wreaking havoc on the world's reserve currency remain at large. The recent surge in the euro – on the back of the proposed €750 billion recovery fund – and the U.S.'s failure to contain the outbreak have been singled out as key headwinds for the greenback. But the handsome run in the euro and the EU's handle on the virus outbreak are not the only factors that have kept the dollar in the doldrums. The narrowing of government bond yields between EU and U.S. rates has also reduced the dollar bias that was prevalent in prior months. The most recent data appears to support the bearish narrative on the dollar. Net shorts (bets against the dollar) rose to a nine-year high in the wake of the Federal Reserve's dovish tone last week, according to data from CTFC. Net shorts against the greenback hit $24.27 billion in the week ended July 28, up from $18.81 billion the prior period, CFTC data showed.
  • Oil prices slid on Tuesday amid concerns that a nascent recovery in fuel demand could stall as a fresh wave of COVID-19 infections around the world sparks tighter lockdowns just as major producers ramp up output. The slide comes after WTI rose 1.8% and Brent climbed 1.5% on Monday on better-than-expected data on manufacturing activity in Asia, Europe and the United States showing factories were emerging from the worst of the early coronavirus pandemic impact. Denting fuel demand, cities from Manila to Melbourne are tightening lockdowns to battle new infections, while Norway has stopped cruise ship traffic in the latest European travel alarm In a further sign of a patchy rebound in demand, analysts estimate U.S. refined product stockpiles rose last week, according to a preliminary Reuters poll ahead of data due from the American Petroleum Institute industry group later on Tuesday and the U.S. government on Wednesday. Five analysts estimated, on average, that U.S. inventories of gasoline rose by 600,000 barrels. Distillate stockpiles, which include diesel and heating oil, likely grew by 800,000 barrels, while crude stocks fell by 3.3 million barrels in the week to July 31. At the same time producers in the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, are stepping up output this month, adding around 1.5 million barrels a day of supply. U.S. producers also plan to restart shut-in production and inventories remain near historical highs. The U.S.’s Institute for Supply Management said Monday that its manufacturing index rose to 54.2 last month, up from a June reading of 52.6.  Meanwhile in China, the Caixin manufacturing purchasing managers’ index (PMI) released on Monday also hit a four-month high of 52.8 in July, up from 51.2 in June, This cheered investors by suggesting an economic recovery could be under way that that could drive fuel demand back up. Investors are now looking towards the American Petroleum Institute (API) crude oil data to be released tomorrow for further direction.

 

 
Intraday RESISTANCE LEVELS
4th August 2020 R1 R2 R3
GOLD-XAU 1,981-1,990 2,005 2,020
Silver-XAG 24.40 24.90 25.50-26.10
Crude Oil 41.00 42.00 43.40-44.20
EURO/USD 1.1800 1.1850 1.1900-1.1950
GBP/USD 1.3090-1.3160 1.3210 1.3290-1.3350
USD/JPY 106.00 106.50 106.90-107.50

Intraday SUPPORTS LEVELS
4th August 2020 S1 S2 S3
GOLD-XAU 1,964-1,950 1,944 1,927-1,911
Silver-XAG 24.00-23.50 22.80 22.00-21.50
Crude Oil 40.60-39.50 38.50 37.60-37.10
EURO/USD 1.1750-1.1700 1.1650 1.1620-1.1540
GBP/USD 1.3015-1.2950 1.2900 1.2840-1.2760
USD/JPY 105.50-104.90 104.30 103.90-103.10

Intra-Day Strategy (4th August 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 Monday made its intraday high of US$1987.93/oz and low of US$1960.73/oz. Gold up 0.111% at US$1975.95/oz.

Technicals in Focus:

In daily charts, prices are above 50DMA (1642) and breakage below will call for 1600. MACD is above zero line and histograms are also increasing trend and it will bring upward stance in the upcoming sessions. RSI is in neutral region and more upside is expected before it gets stretched. Stochastic Oscillator is in oversold 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 1964-1900 with risk below 1900, targeting 1981-1990 and 2000-2020. Sell below 1983-2020 keeping stop loss closing above 2020, targeting 1964-1950-1944 and 1927-1911-1900.

 
Intraday Support Levels
S1     1,964-1,950
S2     1,944
S3     1,927-1,911
Intraday Resistance Levels
R1     1,981-1,990
R2     2,005
R3     2,020

Technical Indicators

Name   Value Action
14DRSI  

87.982

Buy
20-DMA   1836.63 Buy
50-DMA  

1774.65

Buy
100-DMA   1715.98 Buy
200-DMA   1624.58 Buy
STOCH(5,3)   86.503 Sell
MACD(12,26,9)   47.894 Sell

Silver - XAG

AAFX TRADING

Silver on Monday made its intraday high of US$25.40/oz and low of US$23.99/oz settled up by 3.419% at US$25.40/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 20DMA (21.60), breakage below will lead to 19.40. MACD is above zero line and histograms are increasing trend and it will bring bullish stance in the upcoming sessions. RSI is approaching overbought region, indicating buy signal for now. The Stochastic Oscillator is in neutral region and giving positive crossover to show upside move for the intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above, buy above 24.00-21.55 targeting 24.40-24.90-25.50 and 26.10-27.00; stop breakage below 21.50. Sell below 24.90-27.00 with stop loss above 27.00; targeting 24.00-23.50-22.80 and 22.00-21.50-20.90.

 
Intraday  Support Levels
S1     24.00-23.50
S2     22.80
S3     22.00-21.50

Intraday  Resistance Levels
R1     24.40
R2     24.90
R3     25.50-26.10

TECHNICAL INDICATORS
Name   Value Action
14DRSI   68.514 Buy
20-DMA   21.60 Buy
50-DMA   19.42 Buy
100-DMA   17.17 Buy
200-DMA   17.29 Buy
STOCH(5,3)   64.268 Buy
MACD(12,26,9)   0.831 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Monday made an intra‐day high of US41.34/bbl, intraday low of US$39.72/bbl and settled up by 0.854% to close at US$40.82/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 40.60-36.50 with risk daily closing below 36.65 and targeting 41.20-42.00 and 43.40-44.00. Sell in between 41.00-44.60 with stop loss at 45.00; targeting 40.60-39.50 and 38.50-37.10.

 
Intraday Support Levels
S1     40.60-39.50
S2     38.50
S3     37.60-37.10

Intraday Resistance Levels
R1     41.00
R2     42.00
R3     43.40-44.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   56.099 Sell
20-DMA   40.83 Buy
50-DMA   39.16 Buy
100-DMA   32.14 Buy
200-DMA   43.23 Sell
STOCH(5,3)   64.130 Buy
MACD(12,26,9)   0.997 Sell

EUR/USD

AAFX TRADING

EUR/USD on Monday an intraday low of US$1.1695/EUR, high of US$1.1796/EUR and settled the day down by 0.0764% to close at US$1.1761/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 oversold territory and giving negative crossovers to signal for bearish 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 1.1750-1.1540 with risk below 1.1540, targeting 1.1800-1.1850 and 1.1900-1.1950. Sell below 1.1800-1.1950 targeting 1.1720-1.1650-1.1620 and 1.1500-1.1450-1.1400 with stop-loss at daily closing above 1.1950.

 
Intraday Support Levels
S1     1.1750-1.1700
S2     1.1650
S3     1.1620-1.1540

Intraday  Resistance Levels
R1     1.1800
R2     1.1850
R3     1.1900-1.1950

TECHNICAL INDICATORS
Name   Value Action
14DRSI   64.032 Buy
20-DMA   1.1284 Buy
50-DMA   1.1161 Buy
100-DMA   1.1059 Buy
200-DMA   1.1055 Buy
STOCH(5,3)   81.758 Buy
MACD(12,26,9)   -0.0011 Buy

GBP/USD

AAFX TRADING

GBP/USD on Monday made an intra‐day low of US$1.3004/GBP, high of US$1.3111/GBP and settled the day down by 0.006% to close at US$1.3074/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 1.3090-1.3350 with targets at 1.3015-1.2950-1.2870 and 1.2760-1.2680-1.2600 stop-loss should be 1.3100. Buy above 1.2870-1.2430 with targets 1.2870-1.2950 and 1.2015-1.3090 with stop loss closing below 1.2400.

 
Intraday Support Levels
S1     1.3015-1.2950
S2     1.2900
S3     1.2840-1.2760

Intraday Resistance Levels
R1     1.3090-1.3160
R2     1.3210
R3     1.3290-1.3350

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

55.904

Buy
20-DMA   1.2420 Buy
50-DMA   1.2651 Buy
100-DMA   1.2745 Sell
200-DMA   1.2905 Sell
STOCH(5,3)   90.940 Sell
MACD(12,26,9)   0.0305 Sell

USD/JPY

AAFX TRADING

USD/JPY on Monday made intra‐day low of JPY105.57/USD and made an intraday high of JPY106.46/USD and settled the day up by 0.166% at JPY105.94/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 106.00-111.00 with risk above 111.00 targeting 105.50-104.90-104.50 and 103.90-103.10. Long positions above 105.50-103.00 with targets of 106.00-106.50-106.90 and 107.90-108.40-109.40 with stop below 105.00.

 
Intraday Support Levels
S1     105.50-104.90
S2     104.30
S3     103.90-103.10

INTRADAY RESISTANCE LEVELS
R1     106.00
R2     106.50
R3     106.90-107.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   43.904 Buy
20-DMA   107.21 Sell
50-DMA   107.45 Sell
100-DMA   107.53 Sell
200-DMA   108.36 Sell
STOCH(9,6)   44.253 Sell
MACD(12,26,9)   -0.1448 Sell

AAFX TRADING
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