AAFX TRADING

Daily Market Lookup

  • The dollar edged higher in early European trading Friday, but still heading for its first weekly loss in three as doubts emerge about the strength of the U.S. economic recovery. The weekly initial jobless claims data came in weaker-than-expected on Thursday, adding to last week’s nonfarm payrolls number that suggested that the recovery in the jobs market in the U.S. would be a prolonged affair. Federal Reserve Chairman Jerome Powell admitted as much on Wednesday, when he stated that the central bank would have to remain patient with its accommodative monetary policy stance. This has all created concerns that the dollar's previous rally had priced in too fast a pace of rebound for the U.S. economy. Elsewhere, GBP/USD dropped 0.2% to 1.3786, after the release of data showing Britain's economy shrank 9.9% in 2020. This was the biggest annual fall in output since modern records began as the coronavirus ravaged its services-dominated economy. That said, Britain's gross domestic product grew 1.0% in the final quarter of last year, double the 0.5% growth widely expected. This release makes it unlikely that Britain will fall into recession, as although the economy is set to shrink sharply in early 2021 due to the effects of the current lockdown, it is expected to rebound in the second quarter as the ongoing vaccination program prompts a return to something like normalcy. That said, the International Monetary Fund said in a report this week that Russia should cut interest rates by as much as 50 basis points in the coming months to prevent inflation falling below the central bank’s 4% target later in the year. The dollar headed for its first losing week in three as new signs of weakness in the U.S. jobs market dented investor expectations about the pace of economic recovery from the pandemic. Bitcoin hit a new all-time high of $49,000 on Friday after BNY Mellon (NYSE:BK) became the latest firm to embrace cryptocurrencies, saying it will form a new unit to help clients hold, transfer and issue digital assets. The dollar remained on the back foot on Friday in Asia, pinned near two-week lows, after the release of weaker-than-expected weekly U.S. jobless claims data the previous day. That added to recent concerns that the dollar's previous rally had priced in too fast a pace of rebound for the U.S. economy. There has been a divergence in views among traders this year over just how U.S. President Joe Biden's planned $1.9 trillion fiscal stimulus package will affect the dollar. Some see it as bolstering the currency as it should speed a U.S. recovery relative to other countries, while others reckoned it would feed a global reflation narrative that should lift riskier assets at the dollar's expense. The world's most popular cryptocurrency is on course for a nearly 22% weekly advance, its biggest since the period ended Jan. 3.
  • Oil prices soared on Monday to their highest in about 13 months as fears of heightened tensions in the Middle East prompted fresh buying, while hopes that a U.S. stimulus and an easing of lockdowns will buoy fuel demand provided support. The Saudi-led coalition fighting in Yemen said late on Sunday it intercepted and destroyed an explosive-laden drone fired by the Iran-aligned Houthi group toward the kingdom, state TV reported, raising fears of fresh Middle East tensions U.S. President Joe Biden pushed for the first major legislative achievement of his term on Friday, turning to a bipartisan group of local officials for help on his $1.9 trillion coronavirus relief plan. Oil prices have rallied over recent weeks also as supplies tighten, due largely to production cuts from the OPEC and allied producers in the group OPEC+. "On top of that, robust global stock markets boosted investors' risk appetite," said Satoru Yoshida, a commodity analyst with Rakuten Securities. Asian shares advanced to record highs on Monday as successful coronavirus vaccine rollouts globally raise hopes of a rapid economic recovery amid new fiscal aid from Washington. Oil prices have reached a critical threshold where OPEC+ must decide whether to increase production, or risk losing market share again to U.S. shale producers. Front-month Brent futures prices have climbed to more than $60 per barrel, up from less than $40 when the first successful vaccines were announced in November, and less than $20 when the pandemic was raging in April. After adjusting for inflation, Brent prices are now in the 58th percentile for all months since the start of 1990, which is consistent with slow but steady increases in output by non-OPEC producers. In the last decade, whenever Brent prices averaged more than about $57 per barrel, U.S. producers captured all the growth in global oil consumption, increasing their market share at the expense of OPEC and its allies. Responding to the earlier rise in prices, U.S. producers have already increased the number of rigs drilling for oil to nearly 300, up from a low of just 172 in August, according to oilfield services company Baker Hughes. More recent price increases are likely to ensure the number of active rigs increases at least until the end of June, when the count is likely to exceed 425 or even 450, if the current trend continues. Reflecting the rising rig count, U.S. production from the Lower 48 states excluding the Gulf of Mexico is already forecast to rise from current levels by 340,000 barrels per day (bpd) by the end of 2021. If prices rise further, both drilling and production are likely to accelerate even faster in the second half of 2021 and 2022. In the futures market, the price for Brent delivered in April is trading more than $2.70 per barrel higher than for deliveries in November, a price structure known as backwardation Backwardation normally occurs when traders anticipate production will fall short of consumption and petroleum inventories are low and falling further. The current degree of backwardation in the futures market is in the 85th percentile for all trading days since the start of 1990, and has been trending higher. The implication is that traders anticipate a large production shortfall over the rest of this year, with inventories depleted below long-term average levels. If that expectation proves correct, Brent prices are likely to increase further, perhaps significantly. Escalating prices and intensifying backwardation are both signalling the need for more production in the rest of the year. Unless OPEC and its allies in OPEC+ provide the extra output to cover the shortfall, it will come from U.S. shale producers and other non-OPEC sources, encouraged by rising prices to boost output. Between 2011 and the first half of 2014, and then again between 2017 and 2019, OPEC and then OPEC+ failed to increase output enough to relieve the anticipated shortage and ease upward pressure on prices. In both instances, prices surged, the market moved into a large and sustained backwardation and, with a delay of 12-18 months, U.S. shale production surged higher. Both times, OPEC insisted the market was not tight and there was no need to increase output – until it was too late and the surge in shale production had already pushed the market back into an incipient oversupply. OPEC members harvested the windfall from higher prices and revenues, even as their market share eroded and shale production surged, creating conditions for an eventual slump.. OPEC’s delay in relieving the shortfall contributed to the explosive upswing in prices, worsening cyclical instability, and making the next cyclical downturn inevitable. In March and April this year, OPEC+ will again face the same question about whether to increase production to pre-empt an unsustainable increase in prices.

 

 
Intraday RESISTANCE LEVELS
15th February 2021 R1 R2 R3
GOLD-XAU 1,839-1,828 1,849 1,862-1,870
Silver-XAG 27.65-28.20 28.90 29.50
Crude Oil 62.00 62.00 62.90-64.50
EURO/USD 1.2150-1.2190 1.2250 1.2300-1.2340
GBP/USD 1.3940-1.3990 1.4040 1.4100-1.4140
USD/JPY 105.60-106.10 106.90 107.50

Intraday SUPPORTS LEVELS
15th February 2021 S1 S2 S3
GOLD-XAU 1,819-1,800 1,787 1,776-1,764
Silver-XAG 27.25-26.50 26.05 25.30-24.40
Crude Oil 60.10-59.50 58.80 58.00-57.50
EURO/USD 1.2090-1.2020 1.1960 1.1925-1.1850
GBP/USD 1.3860-1.3800 1.3710 1.3600-1.3540
USD/JPY 105.00-104.50 103.90 103.50-103.15

Intra-Day Strategy (15th February 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 Friday made its intraday high of US$1830.63/oz and low of US$1810.43/oz. Gold down 0.0065% at US$1824.49/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 1839-1764 with risk below 1764, targeting 1849-1867 and 1870-1878. Sell below 1849-1879 keeping stop loss closing above 1879, targeting 1839-1828-1819 and 1800-1791-1783.

 
Intraday Support Levels
S1     1,819-1,800
S2     1,787
S3     1,776-1,764
Intraday Resistance Levels
R1     1,839-1,828
R2     1,849
R3     1,862-1,870

Technical Indicators

Name   Value Action
14DRSI  

43.752

Buy
20-DMA   1840.29 Sell
50-DMA  

1857.01

Buy
100-DMA   1877.75 Sell
200-DMA   1850.29 Buy
STOCH(5,3)   52.503 Buy
MACD(12,26,9)   -4.276 Sell

Silver - XAG

AAFX TRADING

Silver on Friday made its intraday high of US$27.42/oz and low of US$27.42/oz settled up by 1.609% at US$27.33/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 27.65-31.00 with stop loss above 31.00; targeting 27.25-26.50 and 25.90-25.05-24.45. Buy silver in between 27.25-24.60, targeting 27.65-28.20-28.90 and 29.50-29.90 with stop loss should be place on the breakage below 24.60.

 
Intraday  Support Levels
S1     27.25-26.50
S2     26.05
S3     25.30-24.40

Intraday  Resistance Levels
R1     27.65-28.20
R2     28.90
R3     29.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   57.334 Buy
20-DMA   26.52 Sell
50-DMA   25.87 Sell
100-DMA   24.96 Sell
200-DMA   23.32 Buy
STOCH(5,3)   54.468 Sell
MACD(12,26,9)   0.442 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Friday made an intra‐day high of US59.70/bbl, intraday low of US$57.28/bbl and settled up by 3.034% to close at US$59.55/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 60.10-57.50 with risk daily closing below 57.50 and targeting 60.10-59.50-58.80 and 58.00-. Sell in between 58.00-60.60 with stop loss at 60.60; targeting 57.50-57.00-55.90 and 54.60-54.00-53.60.

 
Intraday Support Levels
S1     60.10-59.50
S2     58.80
S3     58.00-57.50

Intraday Resistance Levels
R1     62.00
R2     62.00
R3     62.90-64.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   76.168 Sell
20-DMA   53.57 Buy
50-DMA   50.02 Buy
100-DMA   45.13 Buy
200-DMA   41.53 Buy
STOCH(5,3)   97.130 Buy
MACD(12,26,9)   1.370 Buy

EUR/USD

AAFX TRADING

EUR/USD on Friday an intraday low of US$1.2080/EUR, high of US$1.2134/EUR and settled the day down by 0.065% to close at US$1.2119/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 20DMA (1.2177), which become immediate resistance level, break above will target 1.1970. MACD is above zero line and histograms are increasing mode which will bring bullish view. Stochastic is in overbought territory and giving negative crossovers to signal for bearish 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 1.2090-1.1840 with risk below 1.1800, targeting 1.2150-1.2190 and 1.2300-1.2350-1.2400. Sell below 1.2150-1.2545 targeting 1.2090-1.2020-1.1960 and 1.1925-1.1870 with stop-loss at daily closing above 1.2545.

 
Intraday Support Levels
S1     1.2090-1.2020
S2     1.1960
S3     1.1925-1.1850

Intraday  Resistance Levels
R1     1.2150-1.2190
R2     1.2250
R3     1.2300-1.2340

TECHNICAL INDICATORS
Name   Value Action
14DRSI   51.812 Buy
20-DMA   1.2098 Buy
50-DMA   1.2151 Buy
100-DMA   1.1967 Buy
200-DMA   1.1673 Buy
STOCH(5,3)   90.758 Buy
MACD(12,26,9)   0.0044 Buy

GBP/USD

AAFX TRADING

GBP/USD on Friday made an intra‐day low of US$1.3774/GBP, high of US$1.3861/GBP and settled the day up by 0.271% to close at US$1.3850/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 1.3940-1.4140 with targets at 1.3860-1.3800-1.3710 and 1.3600-1.3540-1.3470 stop-loss should be 1.4140. Buy above 1.3860-1.3470 with targets 1.3940-1.3990-1.4040 and 1.4100-1.4140 with stop loss closing below 1.3200.

 
Intraday Support Levels
S1     1.3860-1.3800
S2     1.3710
S3     1.3600-1.3540

Intraday Resistance Levels
R1     1.3940-1.3990
R2     1.4040
R3     1.4100-1.4140

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

68.806

Buy
20-DMA   1.3726 Buy
50-DMA   1.3592 Buy
100-DMA   1.3341 Buy
200-DMA   1.3034 Buy
STOCH(5,3)   88.940 Buy
MACD(12,26,9)   0.0061 Sell

USD/JPY

AAFX TRADING

USD/JPY on Friday made intra‐day low of JPY104.61/USD and made an intraday high of JPY105.17/USD and settled the day up by 0.231% at JPY104.97/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 105.60-108.00 with risk above 108.00 targeting 105.00-104.50-104.00 and 103.10-102.50-102.05. Long positions above 105.60-101.00 with targets of 103.80-104.50 and 105.00-105.40 with stop below 105.00.

 
Intraday Support Levels
S1     105.00-104.50
S2     103.90
S3     103.50-103.15

INTRADAY RESISTANCE LEVELS
R1     105.60-106.10
R2     106.90
R3     107.50

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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