AAFX TRADING

Daily Market Lookup

  • The dollar was up on Tuesday morning in Asia, but jitters over a new COVID-19 strain left the greenback trading well below the peaks seen during a rollercoaster session overnight. However, the dollar is headed for a third consecutive quarterly loss and is down 12.5% from a three-year peak in March Recent hopes for a global economic recovery from COVID-19 that would boost trade and commodity prices, and the resultant bets on a falling dollar, saw export-driven economies and their currencies become an increasingly crowded trade as momentum funds pile in Positioning data showed that the value of overall bets against the dollar eased a little during the previous week but remained near the nine-year highs struck in September. Dollar gains in other currencies were also exaggerated due to low liquidity as short sellers bailed out. However, these moves largely unwound as investors seized the opportunity to buy into the dollar’s downtrend. The discovery of a new strain of the COVID-19 virus, also referred to as the B.1.1.7 strain, in the U.K. saw the pound fall as much as 2.5%, with countries including Canada and Hong Kong shutting their borders to the U.K. to keep the strain out. A full Tier 4 lockdown has been imposed on London and southeastern England, with the ensuing travel chaos and the possibility of food shortages coming days before Christmas. Although there is no evidence that recently rolled out vaccines would not protect against the B.1.1.7 strain, the U.K.’s chief scientific advisor Sir Patrick Vallance warned that the increased transmissibility of the strain was now confirmed and this “likely means that measures will be increased in some areas and not reduced” during a press conference on Monday The GBP/USD pair was down 0.46% to 1.3401. With just days left until the U.K. leaves the European Union (EU), Prime Minister Boris Johnson warned that there are still “problems” in securing a post-Brexit trade deal. However, some investors still remained hopeful that a deal could be struck before the U.K.’s exemption from tariffs expires on Dec. 31. The hopes were based on a report that the EU was considering a compromise on fishing rights, which have been a stumbling block to a deal. The pound continues to remain on edge as negotiations continue. Meanwhile, the U.S. House of Representatives passed an $892 billion coronavirus aid package on Monday, alongside a $1.4 trillion measure to keep the government funded for another year. The relief bill is currently under review by the Senate and will become law once signed by President Donald Trump. ata, including the U.S. GDP and Germany’s GfK Consumer Climate index, are due later in the day.
  • The dollar was firm on Tuesday but traded well below peaks hit on a wild ride higher overnight, as a new coronavirus strain in Britain sent jitters through holiday-thinned currency markets. Sterling fell as much as 2.5% to $1.3190 as countries from Europe to Asia sealed off travel links with Britain to try and contain the highly-infectious mutation. Low liquidity exaggerated dollar gains in other currencies, too, as short sellers bailed out. But moves largely unwound as investors took their chance to buy in to the dollar's downtrend. The pound, helped by a Bloomberg report which said the European Union was considering a compromise on fishing rights - a stumbling block to a trade deal - recovered to trade at $1.3418 in Asia, though it remained on edge as talks progress. The yen was steady at 103.30 per dollar and the Australian and New Zealand dollars a little soft with the nervous mood, but well above overnight lows. Wagers on a falling dollar as the global COVID-19 recovery lifts world trade and commodity prices, tending to benefit export-driven economies and their currencies, is becoming an increasingly crowded trade as momentum funds pile in. The value of overall bets against the dollar eased a fraction last week, positioning data showed, but remains near nine-year highs struck in September. Against a basket of currencies the dollar is headed for a third quarterly loss in a row and is down 12.5% from a three-year peak in March. Together with a new outbreak in Sydney, that held the Experts said there was no evidence that vaccines would not protect against the new virus variant, but Britain's chief scientific adviser said that in the meantime tighter restrictions on public life in Britain were likely. Investors are looking ahead to confidence data in the U.S. and Germany later on Tuesday and have been cheered by the expectation that stimulus checks could go out to Americans next week. British Prime Minister Boris Johnson has warned that there are still "problems" in securing a trade deal with Europe, but financial markets remain hopeful that something can be struck before Britain's exemption from tariffs expires on Dec. 31.
  • The oil market has rallied almost 40% in the last two months, pushing benchmarks to nine-month highs, in a euphoric response to progress on COVID-19 vaccines that has investors thinking the end of the coronavirus pandemic is in sight. Reality struck back on Monday, however, with a selloff driven by the surge in cases in the United Kingdom. Infection rates are at their worst levels in numerous countries and vaccine distribution is proving to be slow, which means the cycles of lockdowns and travel restrictions will continue - keeping fuel demand tepid for many months. That means the bulk of the rally is already in the rearview mirror, traders and brokers said. Brent crude hit a nine-month high of $52.48 a barrel last week, but gave back as much as 4% on Monday, while U.S. crude prices exceeded $49 a barrel before slipping. The market has rallied sharply from the spring, when a combination of a price war between Saudi Arabia and Russia and a crash in demand due to the coronavirus pandemic sent Brent below $20 a barrel and threw U.S. futures into turmoil, with their nadir at negative $40 a barrel. The rally accelerated in the last two months of the year after several drugmakers announced strong responses to vaccine trials, inspiring hope that life would return to something approximating pre-pandemic normalcy. But the energy market's fundamentals still warrant caution, analysts said. The OPEC and the IEA revised their oil demand estimates for next year lower and the latter warned that global markets remain fragile. Oil majors have reduced their expected capital spending for the coming year, and several companies have issued dire outlooks on demand. BP, in its year-ahead forecasts, does not see refinery processing reaching pre-COVID levels for a few years in its most optimistic scenario. OPEC and its allies agreed this month to reduce supply cuts, which will add more oil to the global market. U.S. producers are also adding supply, as energy firms last week added oil and natural gas rigs for the fourth week in a row. Monday's decline could also spur more hedge funds to unload positions after piling into bullish bets since early November. Speculators, including hedge funds and other money managers, have increased net long U.S. crude futures and options positions by more than 25% over the last six weeks. Technical signals indicate that Brent prices were recently in overbought territory However, for late 2021, June barrels are trading nearly 80 cents a barrel higher than December barrels. That suggests oversupply could return by the end of next year, particularly as OPEC boosts production.

 

 
Intraday RESISTANCE LEVELS
22nd December 2020 R1 R2 R3
GOLD-XAU 1,881-1,890 1,905 1,918-1,931
Silver-XAG 26.05-26.50 27.00 27.65-28.00
Crude Oil 48.00-49.20 50.00 50.40-50.90
EURO/USD 1.2245-1.2275 1.2350 1.2400-1.2475
GBP/USD 1.3470-1.3540 1.3590
USD/JPY 103.80-104.50 105.00 105.40-105.90

Intraday SUPPORTS LEVELS
22nd December 2020 S1 S2 S3
GOLD-XAU 1,860-1,849 1,836 1,830-1,817
Silver-XAG 25.60-24.95 24.50 24.10-23.70
Crude Oil 47.00-46.45 45.90 45.10-44.60
EURO/USD 1.2190-1.2150 1.2090 1.2050-1.1990
GBP/USD 1.3400-1.3340 1.3240 1.3200-1.3140
USD/JPY 103.15-102.50 102.05 101.60-101.20

Intra-Day Strategy (22nd December 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$1906.73/oz and low of US$1854.90/oz. Gold down 0.465% at US$1876.38/oz.

Technicals in Focus:

In daily charts, prices are below 50DMA (1899) and breakage above will call for 1916. 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 1860-1817 with risk below 1849, targeting 1881-1890-1905 and 1918-1931-1940. Sell below 1881-1956 keeping stop loss closing above 1956, targeting 1860-1849-1836 and 1830-1817.

 
Intraday Support Levels
S1     1,860-1,849
S2     1,836
S3     1,830-1,817
Intraday Resistance Levels
R1     1,881-1,890
R2     1,905
R3     1,918-1,931

Technical Indicators

Name   Value Action
14DRSI  

61.041

Buy
20-DMA   1838.19 Sell
50-DMA  

1870.78

Sell
100-DMA   1903.27 Sell
200-DMA   1815.19 Buy
STOCH(5,3)   88.503 Buy
MACD(12,26,9)   -6.276 Sell

Silver - XAG

AAFX TRADING

Silver on Friday made its intraday high of US$27.40/oz and low of US$24.93/oz settled up by 1.082% at US$26.14/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 50DMA (24.30), breakage above will lead to 25.00. MACD is below zero line and histograms are decreasing trend and it will bring bearish stance in the upcoming sessions. RSI is approaching neutral region, indicating buy signal for now. The Stochastic Oscillator is in oversold region and giving negative crossover to show downside move for the intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above, sell in between 26.05-28.00 with stop loss above 28.90; targeting 25.65-24.95-24.50 and 24.05-23.70. Buy silver in between 25.50-23.70, targeting 26.05-26.50-27.05 and 27.65-28.00-28.50 with stop loss should be place on the breakage below 24.60.

 
Intraday  Support Levels
S1     25.60-24.95
S2     24.50
S3     24.10-23.70

Intraday  Resistance Levels
R1     26.05-26.50
R2     27.00
R3     27.65-28.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   72.473 Buy
20-DMA   24.22 Sell
50-DMA   24.26 Sell
100-DMA   25.14 Sell
200-DMA   21.09 Buy
STOCH(5,3)   90.268 Sell
MACD(12,26,9)   0.480 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Monday made an intra‐day high of US49.30/bbl, intraday low of US$46.25/bbl and settled down by 2.97% to close at US$47.82/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 20DMA i.e. 45.74 which is a support level and breakage below will call for 45.74. MACD is above 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 upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy above 47.00-44.60 with risk daily closing below 33.85 and targeting 48.00-49.30-50.00 and 50.40- 50.90-51.50. Sell in between 48.00-51.30 with stop loss at 51.30; targeting 47.00-46.45-45.90 and 45.10-44.60-43.85.

 
Intraday Support Levels
S1     47.00-46.45
S2     45.90
S3     45.10-44.60

Intraday Resistance Levels
R1     48.00-49.20
R2     50.00
R3     50.40-50.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   58.216 Sell
20-DMA   46.44 Buy
50-DMA   42.67 Buy
100-DMA   41.71 Buy
200-DMA   36.93 Buy
STOCH(5,3)   58.130 Buy
MACD(12,26,9)   1.555 Buy

EUR/USD

AAFX TRADING

EUR/USD on Monday an intraday low of US$1.2128/EUR, high of US$1.2252/EUR and settled the day up by 0.1562% to close at US$1.2240/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 20DMA (1.2050), which become immediate resistance level, break above will target 1.1990. MACD is above zero line and 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 overbought region and giving no directions to consider right now.

Trading Strategy: Neutral to Buy

Buy above 1.2190-1.1840 with risk below 1.1800, targeting 1.2240-1.2275 and 1.2350-1.2400-1.2475. Sell below 1.2240-1.2475 targeting 1.2190-1.2150-1.2090 and 1.2050-1.1990-1.1960 with stop-loss at daily closing above 1.2475.

 
Intraday Support Levels
S1     1.2190-1.2150
S2     1.2090
S3     1.2050-1.1990

Intraday  Resistance Levels
R1     1.2245-1.2275
R2     1.2350
R3     1.2400-1.2475

TECHNICAL INDICATORS
Name   Value Action
14DRSI   67.812 Buy
20-DMA   1.2107 Buy
50-DMA   1.1919 Buy
100-DMA   1.1859 Buy
200-DMA   1.1490 Buy
STOCH(5,3)   76.758 Buy
MACD(12,26,9)   0.0011 Buy

GBP/USD

AAFX TRADING

GBP/USD on Monday made an intra‐day low of US$1.3187/GBP, high of US$1.3498/GBP and settled the day up by 0.395% to close at US$1.3458/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 20DMA (1.3134) is become immediate support 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 in between 1.3300-1.3540 with targets at 1.3240-1.3200-1.3140 and 1.3115-1.3050 stop-loss should be 1.3600. Buy above 1.3240-1.3050 with targets 1.3300-1.3340-1.3400 and 1.3470-1.3540-1.3600 with stop loss closing below 1.3050.

 
Intraday Support Levels
S1     1.3400-1.3340
S2     1.3240
S3     1.3200-1.3140

Intraday Resistance Levels
R1     1.3470-1.3540
R2     1.3590
R3    

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

53.783

Buy
20-DMA   1.3317 Sell
50-DMA   1.3133 Buy
100-DMA   1.3080 Buy
200-DMA   1.2746 Buy
STOCH(5,3)   68.940 Buy
MACD(12,26,9)   0.009 Sell

USD/JPY

AAFX TRADING

USD/JPY on Monday made intra‐day low of JPY103.24/USD and made an intraday high of JPY103.88/USD and settled the day down by 0.163% at JPY103.31/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 103.80-108.00 with risk above 108.00 targeting 103.15-102.50-102.05 and 101.60-101.20. Long positions above 103.10-101.00 with targets of 103.80-104.50-105.00 and 105.40-105.90- with stop below 105.00.

 
Intraday Support Levels
S1     103.15-102.50
S2     102.05
S3     101.60-101.20

INTRADAY RESISTANCE LEVELS
R1     103.80-104.50
R2     105.00
R3     105.40-105.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   57.307 Buy
20-DMA   104.40 Sell
50-DMA   105.36 Sell
100-DMA   105.36 Sell
200-DMA   106.45 Sell
STOCH(9,6)   57.253 Sell
MACD(12,26,9)   -0.199 Sell

AAFX TRADING
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