AAFX TRADING

Daily Market Lookup

  • The dollar edged higher in early European trading Thursday, continuing the previous session’s gains with traders becoming more risk averse after hefty stock market losses. GBP/USD fell 0.2% to 1.3655, not helped by U.K. Prime Minister Boris Johnson indicating that the country’s current lockdown to combat the coronavirus may last until March. The risk-sensitive AUD/USD was down 0.6% at 0.7613. The main equity indices on Wall Street saw their biggest one-day percentage drops in three months during the previous session, as hedge funds liquidated positions to raise liquidity after suffering losses on short positions in other stocks, amid highly speculative retail buying. This helped boost safe-haven demand for the U.S. currency. Also helping was the more downbeat tone from the U.S. Federal Reserve as it concluded its first policy-setting meeting of the Biden era. The central bank signaled concern about the pace of economic recovery. Attention will turn to the preliminary reading of U.S. gross domestic product in the fourth quarter, due at 8:30 AM ET (1330 GMT), to gauge the extent of the slowdown in the world's largest economy at the end of last year. Elsewhere, EUR/USD fell 0.2% to 1.2083, after a European Central Bank member floated the idea of interest rate cuts to curb the common currency's recent strength. The euro’s level “is something we of course monitor very, very carefully,” Klaas Knot, who heads the Dutch central bank, said in a Bloomberg TV interview on Wednesday. “It’s one of the factors, not the exclusive factor, but one of the factors we take into account when arriving at our assessment of where inflation is going to go.” Although the euro has edged lower Thursday, it gained almost 9% against the dollar last year, the biggest annual jump since 2017.
  • The dollar extended gains against most currencies on Thursday as a stock market rout due to concerns about excessive valuations boosted safe-harbour demand for the U.S. currency. The euro nursed losses after a European Central Bank member warned that interest rate cuts are possible to curb the common currency's recent gains. The Australian and New Zealand dollars, two currencies considered a barometer of risk appetite, also fell against their U.S. counterpart in a sign of waning market confidence. Concerns about a short-squeeze among hedge funds, worries about corporate earnings, and delays in coronavirus vaccinations have slammed the brakes on a heady rally in global equities, which could continue to lift the dollar in the short term. Many Asian bourses skidded by more than 1% on Thursday after U.S. stocks suffered their biggest one-day percentage drop in three months on Wednesday. In addition to concerns about corporate earnings and the economic outlook, worries that hedge funds squeezed out of short positions in GameStop Corp (NYSE:GME) and similar companies will take profits on other assets also fuelled risk aversion. The U.S. Federal Reserve kept monetary policy unchanged as expected on Wednesday but did signal some concern about the pace of economic recovery, which some traders said is another negative factor. U.S. gross domestic product data is due later on Thursday to gauge the strength of the world's largest economy as it struggles with the coronavirus pandemic.
  • Gold was down on Thursday morning in Asia, with investors turning to the dollar after the U.S. Federal Reserve expressed concerns about the pace of the U.S. economic recovery from the impact of COVID-19. Gold futures were up 0.50% at $1,835.70 by 11:46 PM ET (4:46 AM GMT), with prices falling to their lowest level since Jan. 18. The dollar was up on Thursday, after hitting a more than one-week high against rival currencies during the previous session. The Fed expressed its concerns on Wednesday as it handed down its first policy decision of 2021 and concluded a two-day policy meeting. The policy decision remained unchanged, with the central bank pledging continued support for the recovery. Fed Chairman Jerome Powell warned that a long road towards full recovery from the impact of COVID-19 remains ahead, and that the recovery is still short of inflation and job goals. ‘The whole focus on exit is premature,” he added. Some U.S. states have started to ease restrictive measures as the number of severe COVID-19 infections slows down in parts of the country. However, the country’s death toll continues to rise.
  • Oil was down Thursday morning in Asia over fresh fuel demand worries after England restricted travel and China seeks to limit travel during the upcoming Lunar New Year holidays. The black liquid did receive a boost from a larger-than-expected draw in U.S. crude oil supplies, accredited by investors to an increase in U.S. crude exports and a decrease in imports. Wednesday's data from the U.S. Energy Information Administration (EIA) showed a draw of 9.910 million barrels for the week ended Jan. 22, against the 430,000-barrel draw in forecasts prepared by Investing.com and the 4.351-million-barrel draw reported during the previous week. The draw was the biggest recorded since July 2020. The EIA data also showed a build in gasoline stockpiles rose and a draw in distillate fuel inventories due to slightly lower refinery runs Data from the American Petroleum Institute released a day earlier showed a draw of 5.272 million barrels. However, the COVID-19 pandemic is turning investors’ focus to weakening fuel demand as the emergence of new, highly contagious variants of the virus see the reintroduction of restrictive measures such as lockdowns in some countries U.K. Prime Minister Boris Johnson announced a clampdown on travellers from 22 high-risk countries that have reported variants, including South Africa. Travellers from the countries will be required to quarantine for 10 days and are barred from outbound trips for all but exceptional reasons. Johnson also indicated on Wednesday that the lockdown currently in place in England, which began on Jan. 4, would last until Mar. 8. However, fuel demand in China, the world’s largest oil importer, is of more concern to investors. The recent outbreak of COVID-19 cases is expected to put a dent into the Lunar New Year travel season, normally the countries busiest. The Chinese Ministry of Transport forecasts that the number of trips that will be taken will increase 15% from 2020, during the first wave of COVID-19, but decrease 40% from 2019. This will make it difficult to expect the increased fuel demand that supported the market in 2020. Flights from Shanghai are already being cancelled, Commonwealth Bank’s Dhar pointed out.

 

 
Intraday RESISTANCE LEVELS
28th January 2021 R1 R2 R3
GOLD-XAU 1,845-1,858 1,867 1,878-1,887
Silver-XAG 25.60-26.05 26.50 27.00-27.65
Crude Oil 53.00 53.60 54.00-54.60
EURO/USD 1.2150-1.2190 1.2250 1.2300-1.2355
GBP/USD 1.3710-1.3800 1.3860 1.3910-1.3990
USD/JPY 104.50 105.00 105.40-106.00

Intraday SUPPORTS LEVELS
28th January 2021 S1 S2 S3
GOLD-XAU 1,835 1,828 1,817-1,800
Silver-XAG 25.05-24.45 24.00 23.60-23.00
Crude Oil 52.50-51.90 51.10 50.50-49.80
EURO/USD 1.2090 1.2050 1.1960-1.1925
GBP/USD 1.3600 1.3540 1.3470-1.3410
USD/JPY 104.00-103.50 103.15 102.50-102.05

Intra-Day Strategy (28th January 2021)
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$1853.05/oz and low of US$1831.15/oz. Gold down 0.387% at US$1843.13/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 1835-1800 with risk below 1800, targeting 1845-1854-1867 and 1878-1890-1900. Sell below 1845-1910 keeping stop loss closing above 1910, targeting 1835-1828-1817 and 1810-1800.

 
Intraday Support Levels
S1     1,835
S2     1,828
S3     1,817-1,800
Intraday Resistance Levels
R1     1,845-1,858
R2     1,867
R3     1,878-1,887

Technical Indicators

Name   Value Action
14DRSI  

42.752

Buy
20-DMA   1855.60 Sell
50-DMA  

1855.60

Buy
100-DMA   1879.75 Sell
200-DMA   1848.29 Buy
STOCH(5,3)   86.503 Buy
MACD(12,26,9)   7.276 Sell

Silver - XAG

AAFX TRADING

Silver on Wednesday made its intraday high of US$25.64/oz and low of US$25.18/oz settled up by 0.493% at US$25.44/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 overbought 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, sell in between 25.60-28.00 with stop loss above 28.00; targeting 25.05-24.45-24.00 and 23.60-23.20. Buy silver in between 25.05-23.20, targeting 25.60-26.05-26.50 and 27.00-27.65-28.00 with stop loss should be place on the breakage below 24.60.

 
Intraday  Support Levels
S1     25.05-24.45
S2     24.00
S3     23.60-23.00

Intraday  Resistance Levels
R1     25.60-26.05
R2     26.50
R3     27.00-27.65

TECHNICAL INDICATORS
Name   Value Action
14DRSI   48.957 Buy
20-DMA   25.82 Sell
50-DMA   24.99 Sell
100-DMA   24.81 Sell
200-DMA   22.53 Buy
STOCH(5,3)   36.468 Sell
MACD(12,26,9)   0.0145 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Wednesday made an intra‐day high of US53.22/bbl, intraday low of US$51.79/bbl and settled down by 0.349% to close at US$52.53/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 20DMA i.e. 48.34 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 52.50-48.50 with risk daily closing below 48.50 and targeting 53.00-53.60-54.00 and 54.60 55.00-55.70. Sell in between 52.60-55.70 with stop loss at 55.70; targeting 51.90-51.20 and 50.25-49.30-48.50.

 
Intraday Support Levels
S1     52.50-51.90
S2     51.10
S3     50.50-49.80

Intraday Resistance Levels
R1     53.00
R2     53.60
R3     54.00-54.60

TECHNICAL INDICATORS
Name   Value Action
14DRSI   69.203 Sell
20-DMA   51.67 Buy
50-DMA   48.17 Buy
100-DMA   43.82 Buy
200-DMA   40.00 Buy
STOCH(5,3)   61.130 Buy
MACD(12,26,9)   1.433 Buy

EUR/USD

AAFX TRADING

EUR/USD on Wednesday an intraday low of US$1.2057/EUR, high of US$1.2169/EUR and settled the day up by 3.25% to close at US$1.2111/EUR.

Technicals in Focus:

EUR/USD on Wednesday an intraday low of US$1.2057/EUR, high of US$1.2169/EUR and settled the day up by 3.25% to close at US$1.2111/EUR.

Trading Strategy: Neutral to Buy

Buy above 1.2150-1.1840 with risk below 1.1800, targeting 1.1290-1.2300 and 1.2350-1.2400-1.2475. Sell below 1.2150-1.2545 targeting 1.2050-1.1990-1.1960 and 1.1925-1.1870 with stop-loss at daily closing above 1.2545.

 
Intraday Support Levels
S1     1.2090
S2     1.2050
S3     1.1960-1.1925

Intraday  Resistance Levels
R1     1.2150-1.2190
R2     1.2250
R3     1.2300-1.2355

TECHNICAL INDICATORS
Name   Value Action
14DRSI   46.812 Buy
20-DMA   1.2182 Buy
50-DMA   1.2115 Buy
100-DMA   1.1942 Buy
200-DMA   1.1942 Buy
STOCH(5,3)   64.758 Sell
MACD(12,26,9)   0.0044 Buy

GBP/USD

AAFX TRADING

GBP/USD on Wednesday made an intra‐day low of US$1.3658/GBP, high of US$1.3757/GBP and settled the day down by 0.407% to close at US$1.3678/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 20DMA (1.3610) 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 1.3800-1.3990 with targets at 1.3650-1.3590 and 1.3540-1.3470-1.3400 stop-loss should be 1.3900. Buy above 1.3650-1.3240 with targets 1.3710-1.3800-1.3860 and 1.3910-1.3990 with stop loss closing below 1.3200.

 
Intraday Support Levels
S1     1.3600
S2     1.3540
S3     1.3470-1.3410

Intraday Resistance Levels
R1     1.3710-1.3800
R2     1.3860
R3     1.3910-1.3990

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

52.783

Buy
20-DMA   1.3616 Buy
50-DMA   1.3471 Buy
100-DMA   1.3218 Buy
200-DMA   1.2940 Buy
STOCH(5,3)   50.940 Buy
MACD(12,26,9)   0.0067 Sell

USD/JPY

AAFX TRADING

USD/JPY on Wednesday made intra‐day low of JPY103.56/USD and made an intraday high of JPY104.19/USD and settled the day down by 0.457% at JPY104.08/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 104.50-108.00 with risk above 108.00 targeting 104.00-103.10-102.50 and 102.05-101.60. Long positions above 104.00-101.00 with targets of 103.80-104.50 and 105.00-105.40 with stop below 105.00.

 
Intraday Support Levels
S1     104.00-103.50
S2     103.15
S3     102.50-102.05

INTRADAY RESISTANCE LEVELS
R1     104.50
R2     105.00
R3     105.40-106.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   59.407 Buy
20-DMA   103.66 Sell
50-DMA   103.80 Sell
100-DMA   104.45 Sell
200-DMA   105.66 Sell
STOCH(9,6)   79.253 Sell
MACD(12,26,9)   0.0750 Sell

AAFX TRADING
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