AAFX TRADING

Daily Market Lookup

  • The dollar was ending 2020 in a downward spiral on Thursday with investors wagering a global economic recovery will suck money into riskier assets even as the U.S. has to borrow ever more to fund its swelling twin deficits. It also fell against the Chinese yuan, breachingh 6.4900 for the first time since mid-2018, though Chinese banks were later reported to be buying dollars to limit the drop. Sterling held gains after lawmakers approved a post-Brexit trade deal with the European Union, stretching as far as $1.3641 a level unseen since May 2018. Against a basket of currencies the dollar had sunk to 89.643, having touched it lowest since April 2018. That left it down 7.2% on the year, and no less than 13% on the 102.99 peak hit during the market mayhem of mid-March. The prospect of a brighter 2021 has lessened the need for the safe-haven dollar, while burnishing the attraction of riskier assets especially in emerging markets. Bears have also resurrected the "twin deficits" excuse for shorting the dollar - that the explosion in the budget and trade deficits means more dollars being printed and moved abroad. From this perspective the new U.S. stimulus bill is dollar negative as it adds to the nation's debt, and President-elect Joe Biden is promising a lot more next year. The country is also haemorrhaging dollars on its trade account where the deficit on goods hit a record $84.8 billion in November as imports surged past pre-pandemic levels. Likewise, the current account deficit widened to a 12-year high in the third quarter and there was a large shortfall in net financial transactions as Americans borrowed more from abroad. In contrast, the European Union runs a huge current account surplus, largely thanks to Germany, so there is a natural inflow to euros through trade.
  • The dollar was down on Thursday morning in Asia. It ended 2020 on a down note over bets that a global economic recovery in 2021 will pull money into riskier assets, even as the growing U.S. ‘twin deficits’ of a huge budget increase and trade deficits argue for an ever-cheaper greenback. Hopes that 2021 will be better than 2020 have led to a retreat from the safe-haven dollar, with investors increasingly turning to the more attractive riskier assets, particularly in emerging markets. Bears have also been resurrecting the ‘twin deficits’ excuse to short the dollar, with the deficits meaning that more dollars are being printed and moved overseas. The U.S. stimulus bill, passed by the House of Representatives and the Senate during the past week, also will be negative for the dollar as U.S. debt balloons and President-elect Joe Biden promises even more measures when his administration takes office in January. Also dampening sentiment for the dollar is the U.S. trade account. The account has been bleeding dollars as the deficit on goods hit a record $84.8 billion in November, with imports soaring past pre-COVID-19 levels. The current account deficit also saw a 12-year high in the third quarter, with a large shortfall in net financial transactions as Americans borrowed more from abroad. Across the Atlantic, the European Union (EU) is ending 2020 with a huge current account surplus, thanks in large part to Germany. The surplus means that there is a natural inflow to euros through trade, and the euro is at $1.2305, after seeing its highest since April 2018 with a gain of almost 10% for the year. Bulls are looking to see if the euro will hit $1.2413 and $1.2476, two stops on the way to 2018’s peak of $1.2555. Data released earlier in the day in China showed December’s manufacturing Purchasing Managers Index (PMI) at 51.9, down from the reading of 52 in forecasts prepared by Investing.com and November’s 52.1 figure. The data also showed December’s non-manufacturing PMI at 55.7, also down from November’s reading of 56.4. The GBP/USD pair edged up 0.16% to 1.3643, levels that have not been seen since May 2018. The pound was boosted by the post-Brexit trade deal struck between the U.K. and the EU becoming law after the Queen gave her approval earlier in the day. The House of Lords gave the bill to approve the deal an unopposed third reading late on Wednesday, after MPs had voted it through by 521 votes to 73.
  • Oil was down Thursday morning in Asia, as an eventful year for the black liquid draws to a close. The COVID-19 pandemic, and the ensuing strict lockdowns, saw around a fifth of global crude oil markets’ value wiped out in 2020 and a shock maiden venture into negative territory for WTI futures in April, as fuel demand tanked. However, unprecedented stimulus measures from governments globally have helped prices rebound from these lows, with both Brent and WTI futures more than doubling from the decade-lows seen in the first quarter of the year. A bright spot for investors ahead of the turning of the year was better-than expected U.S. crude oil supply data. The data, released on Wednesday by the U.S. EIA, showed a draw of 6.065 million barrels in supplies for the week to December 25. The draw was much bigger than the 2.583-million-barrel draw in forecasts prepared by Investing.com and the 562,000-barrel draw seen during the previous week. The EIA data follows Tuesday’s crude oil supply data from the American Petroleum Institute, which showed a draw of 4.785 million barrels. In Asia, China approved BBIBP-CorV, one of the two COVID-19 vaccines by China National Biotec Group. However, immediate fuel demand concerns over the spread of the new B177 strain of the COVID-19 virus and the ensuing lockdowns put a damper on investor sentiment. Supply-wise, data from Baker Hughes showed that U.S. energy firms this week added three oil and natural gas rigs in the best quarter for boosting the rig count since the second quarter of 2017 The Organization of the Petroleum Exporting Countries and allies, or OPEC+, will ring in the new year with a series of meetings to discuss easing current production cuts. The cartel’s Joint Technical Committee and the Joint Ministerial Monitoring Committee will meet on Jan. 3 and 4 respectively, with the 13th OPEC and non-OPEC Ministerial Meeting scheduled for Jan. 4. Current production cuts are set to ease by 500,000 barrels per day in January.

 

 
Intraday RESISTANCE LEVELS
31st December 2020 R1 R2 R3
GOLD-XAU 1,894-1,905 1,918 1,931-1940
Silver-XAG 26.50-27.00 27.30 27.65-28.00
Crude Oil 48.50-49.30 50.00 50.40-51.00
EURO/USD 1.2300-1.2350 1.2400 1.2475-1.2545
GBP/USD 1.3590 1.3670 1.3710-1.3800
USD/JPY 103.80-104.50 105.00 105.40-105.90

Intraday SUPPORTS LEVELS
31st December 2020 S1 S2 S3
GOLD-XAU 1,887-1,878 1,860 1,849-1,836
Silver-XAG 26.05-25.60 24.95 24.50-24.10
Crude Oil 47.80-47.00 46.45 45.90-45.10
EURO/USD 1.2245-1.2170 1.2140 1.2090-1.2050
GBP/USD 1.3540-1.3470 1.3400 1.3340-1.3240
USD/JPY 103.15-102.50 102.05 101.60-101.20

Intra-Day Strategy (31st 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 Wednesday made its intraday high of US$1894.40/oz and low of US$1875.96/oz. Gold up 0.884% at US$1894.11/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 1884-1836 with risk below 1836, targeting 1894-1905 and 1918-1931-1940. Sell below 1900-1956 keeping stop loss closing above 1956, targeting 1885-1878-1860 and 1849-1836.

 
Intraday Support Levels
S1     1,887-1,878
S2     1,860
S3     1,849-1,836
Intraday Resistance Levels
R1     1,894-1,905
R2     1,918
R3     1,931-1940

Technical Indicators

Name   Value Action
14DRSI  

61.041

Buy
20-DMA   1862.19 Buy
50-DMA  

1866.81

Buy
100-DMA   1895.27 Sell
200-DMA   1828.45 Buy
STOCH(5,3)   67.503 Buy
MACD(12,26,9)   -6.276 Sell

Silver - XAG

AAFX TRADING

Silver on Wednesday made its intraday high of US$26.66/oz and low of US$26.13/oz settled up by 1.752% at US$26.59/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 26.60-28.00 with stop loss above 28.90; targeting 26.05-25.60-24.95 and 24.50-24.05-23.70. Buy silver in between 25.60-23.70, targeting 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     26.05-25.60
S2     24.95
S3     24.50-24.10

Intraday  Resistance Levels
R1     26.50-27.00
R2     27.30
R3     27.65-28.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   56.473 Buy
20-DMA   24.37 Sell
50-DMA   24.28 Sell
100-DMA   25.11 Sell
200-DMA   21.21 Buy
STOCH(5,3)   90.268 Sell
MACD(12,26,9)   0.480 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Wednesday made an intra‐day high of US48.68/bbl, intraday low of US$47.65/bbl and settled up by 0.311% to close at US$48.30/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 47.80-44.60 with risk daily closing below 44.60 and targeting 48.50-49.30 and 50.00-50.40-51.00. Sell in between 48.50-51.30 with stop loss at 51.30; targeting 48.00-47.50-46.45 and 45.90-45.10-44.60.

 
Intraday Support Levels
S1     47.80-47.00
S2     46.45
S3     45.90-45.10

Intraday Resistance Levels
R1     48.50-49.30
R2     50.00
R3     50.40-51.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   62.216 Sell
20-DMA   47.44 Buy
50-DMA   43.67 Buy
100-DMA   42.07 Buy
200-DMA   37.51 Buy
STOCH(5,3)   63.130 Buy
MACD(12,26,9)   1.287 Buy

EUR/USD

AAFX TRADING

EUR/USD on Wednesday an intraday low of US$1.2245/EUR, high of US$1.2274/EUR and settled the day up by 0.382% to close at US$1.2293/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 1.2270-1.1840 with risk below 1.1800, targeting 1.2300-1.2350 and 1.2400-1.2475-1.2545. Sell below 1.2300-1.2545 targeting 1.2245-1.2190-1.2150 and 1.2090-1.2050-1.1990 with stop-loss at daily closing above 1.2545.

 
Intraday Support Levels
S1     1.2245-1.2170
S2     1.2140
S3     1.2090-1.2050

Intraday  Resistance Levels
R1     1.2300-1.2350
R2     1.2400
R3     1.2475-1.2545

TECHNICAL INDICATORS
Name   Value Action
14DRSI   69.812 Buy
20-DMA   1.2180 Buy
50-DMA   1.1973 Buy
100-DMA   1.1885 Buy
200-DMA   1.1533 Buy
STOCH(5,3)   84.758 Buy
MACD(12,26,9)   0.0011 Buy

GBP/USD

AAFX TRADING

GBP/USD on Wednesday made an intra‐day low of US$1.3490/GBP, high of US$1.3624/GBP and settled the day up by 0.920% to close at US$1.3623/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 1.3590-1.3800 with targets at 1.3540-1.3470-1.3400 and 1.3340-1.3240- 1.3200 stop-loss should be 1.3800. Buy above 1.3540-1.3240 with targets 1.3600-1.3670 and 1.3710-1.3800 with stop loss closing below 1.3200.

 
Intraday Support Levels
S1     1.3540-1.3470
S2     1.3400
S3     1.3340-1.3240

Intraday Resistance Levels
R1     1.3590
R2     1.3670
R3     1.3710-1.3800

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

61.783

Buy
20-DMA   1.3409 Sell
50-DMA   1.3240 Buy
100-DMA   1.3128 Buy
200-DMA   1.2800 Buy
STOCH(5,3)   66.940 Buy
MACD(12,26,9)   0.009 Sell

USD/JPY

AAFX TRADING

USD/JPY on Wednesday made intra‐day low of JPY102.95/USD and made an intraday high of JPY103.58/USD and settled the day down by 0.387% at JPY103.16/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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