AAFX TRADING

Daily Market Lookup

  • The dollar consolidated at lower levels in early trade in Europe on Wednesday, after a sharp two-day drop driven by signs of weakening economic activity in the U.S. By 3 AM ET (0700 GMT), the dollar index that measures the greenback against a handful of advanced economic currencies was at 93.765, effectively unchanged from late Tuesday but down over half a percent since the end of last week. On Tuesday, fresh data had pointed to a further cooling-off in the U.S. housing market, with building permits and housing starts both falling. That came on top of industrial production data on Monday that showed U.S. factories increasingly struggling with supply chain issues. As a result, investors have trimmed expectations of an interest rate hike by the Federal Reserve next year, having started to put some punchy bets on such a move in previous weeks. The dollar has weakened in the last two days particularly against currencies where near-term interest rate hikes are more of a certainty. Sterling failed to get any support from September inflation data released earlier, which showed a slowdown in monthly rates of both consumer and producer prices. The annual consumer price index came in a 3.1%, rather than the 3.2% expected. The euro, by contrast, received more of a boost from another sharp rise in German producer prices, which added to suspicions that the European Central Bank is starting to fall behind the curve with regard to inflation. Germany’s PPI rose by 2.5% on the month, and by 14.2% on the year, its fastest increase in over 10 years. Alexander Rakau of Oxford Economics pointed out, however, that by far the greatest component of the increase was energy prices, and noted that the monthly pace of core price increases was slowing. In China, it managed a modest bounce against the yuan after falling to its lowest in over four months on Tuesday. The People’s Bank of China kept its prime loan rate unchanged at a regular policy meeting earlier, having also chosen not to cut its reserve requirement ratio last week.
  • The dollar was down on Wednesday morning in Asia, with U.S. bonds impacting currencies. The dollar and yen also came under pressure from a global shares rally that decreased demand for safe-haven assets. Benchmark U.S. 10-year Treasury yields hit a fresh five-month high at 1.6630%, with higher long-term U.S. yields attracting Japanese investors. However, two-year yields hovered around 0.4050% after a sharp retreat from Monday's 19-month high of 0.4480%, an indication of decreasing bets for early interest rate hikes from the Federal Reserve At the same time, markets are coming to "the highly belated realization that whether the Fed raises its interest rate in 2022 or not until later, other central banks are getting in ahead of them... with the Bank of England likely next cab off the rank as early as next month," the note added. Meanwhile, Richmond Fed President Thomas Barkin said on Tuesday that U.S. labor shortages could outlast COVID-19 and limit overall economic growth unless the U.S. improves education, health, and childcare policies to boost the number of people willing and able to work.
  • The dollar traded mostly lower in early dealings in Europe on Tuesday, ahead of what is set to be a quiet day dominated by U.S. corporate earnings and sentiment. Most of the greenback’s losses were against commodity and emerging currencies, with the kiwi still surging after higher-than-expected September inflation figures brought the prospect of more aggressive interest rate hikes into play on Monday. Commodities in general remain red-hot, with copper, tin, crude oil and coal all trading at significant premiums for immediate delivery relative to futures markets. The Russian ruble rose to its highest since July 2020, while both the kiwi and Aussie rose over 0.7%. The dollar was undercut by a drop in U.S. bond yields, which have turned down after failing to breach their June high during last week’s inflation scare. The 10-year benchmark Treasury yield was down 1 basis point at 1.57%, in the wake of data on Monday showing a drop in U.S. industrial production in September. The data calendar for Tuesday is relatively light, with only housing starts and building permit numbers out of the U.S. Instead, the day is filled with speeches from central bankers, including the Federal Reserve’s Mary Daly, Michelle Bowman, Chris Waller and, inevitably, Raphael Bostic. In Europe, Bank of England Governor Andrew Bailey, BoE chief economist Catherine Mann and European Central Bank chief economist Philip Lane are both due to appear.
  • Oil prices fell on Wednesday after the Chinese government stepped up efforts to tame record high coal prices and ensure coal mines operate at full capacity as Beijing moved to ease a power shortage. Prices for Chinese coal and other commodities slumped in early trade, which in turn pulled oil down from an uptick earlier in the day. China's National Development and Reform Commission said late on Tuesday that it would bring coal prices back to a reasonable range and crack down on any irregularities that disturb market order or malicious speculation on thermal coal futures. Oil markets in general remain supported on the back of a global coal and gas crunch, which has driven a switch to diesel and fuel oil for power generation. But the market on Wednesday was also pressured by data from the American Petroleum Institute industry group which showed U.S. crude stocks rose by 3.3 million barrels for the week ended Oct. 15, according to market sources. That was well above nine analysts' forecasts for a rise of 1.9 million barrels in crude stocks, in a Reuters poll. However U.S. gasoline and distillate inventories, which include diesel, heating oil and jet fuel, fell much more than analysts had expected, pointing to strong demand. Data from the U.S. Energy Information Administration is due later on Wednesday.

 

 
Intraday RESISTANCE LEVELS
20th October 2021 R1 R2 R3
GOLD-XAU 1,779-1,790 1,804 1,810-1,820
Silver-XAG 23.50-23.75 24.05 24.55-25.40
Crude Oil 81.90-82.50 83.10 84.00
EURO/USD 1.1660-1.1750 1.1800 1.1850-1.1900
GBP/USD 1.3800-1.3860 1.3910 1.3950-1.3990
USD/JPY 114.20-114.90 115.50 116.00-116.90

Intraday SUPPORTS LEVELS
20th October 2021 S1 S2 S3
GOLD-XAU 1,770-1,760 1,745 1,736-1,728
Silver-XAG 22.60 22.20 21.50-21.00
Crude Oil 81.50-81.00 80.50 79.50-78.90
EURO/USD 1.1590-1.1540 1.1510 1.1460-1.1420
GBP/USD 1.3770-1.3710 1.3670 1.3610-1.3560
USD/JPY 113.50-113.00 112.50 111.70-110.50

Intra-Day Strategy (20th October 2021)
GOLD-XAU Buy on Dips
Silver-XAG Buy on Dips
Crude Oil Neutral to Sell
EUR/USD Neutral to Buy
GBP/USD Neutral to Buy
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Tuesday made its intraday high of US$1785.02/oz and low of US$1762.78/oz. Gold up 0.243% at US$1768.95/oz.

Technicals in Focus:

In daily charts, prices are above 200DMA (1809) and breakage below will call for 1790. MACD is above zero line and histograms are also increasing trend and it will bring upward stance in the upcoming sessions. RSI is in overbought region and more upside is expected before it gets stretched. Stochastic Oscillator is in neutral territory and giving negative crossover to bearish stance for intraday trade.

Trading Strategy: Buy on Dips

Buy in between 1774-1721 with risk below 1721, targeting 1779-1784-1790 and 1804-1810. Sell in between 1774-1804 keeping stop loss closing above 1805, targeting 1774-1760-1745 and 1737-1728.

 
Intraday Support Levels
S1     1,770-1,760
S2     1,745
S3     1,736-1,728
Intraday Resistance Levels
R1     1,779-1,790
R2     1,804
R3     1,810-1,820

Technical Indicators

Name   Value Action
14DRSI  

51.538

Buy
20-DMA   1768.33 Buy
50-DMA  

1776.55

Buy
100-DMA   1787.33 Buy
200-DMA   1794.47 Sell
STOCH(5,3)   33.680 Sell
MACD(12,26,9)   0.912 Buy

Silver - XAG

AAFX TRADING

Silver on tuesday made its intraday high of US$24.10/oz and low of US$23.17/oz settled up by 1.970% at US$23.64/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (26.62), breakage above will lead to 27.60. 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 positive crossover to show upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 22.90-19.55, targeting 22.60-22.90-23.50 and 24.45-25.05-25.50 with stop loss should be place on the breakage below 21.90. Sell in between 23.50-24.70 with stop loss above 25.00; targeting 21.50-21.00-20.50 and 19.90-19.55.

 
Intraday  Support Levels
S1     22.60
S2     22.20
S3     21.50-21.00

Intraday  Resistance Levels
R1     23.50-23.75
R2     24.05
R3     24.55-25.40

TECHNICAL INDICATORS
Name   Value Action
14DRSI   57.130 Buy
20-DMA   22.95 Sell
50-DMA   23.40 Sell
100-DMA   24.17 Sell
200-DMA   24.52 Sell
STOCH(5,3)   77.556 Sell
MACD(12,26,9)   -0.587 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Tuesday made an intra‐day high of US$82.86/bbl, intraday low of US$80.97/bbl and settled down by 1.055% to close at US$82.31/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 20DMA i.e. 68.50 which is a support level and breakage below will call for 65.40. MACD is above zero line and histograms are in increasing mode will bring bullish stance in the upcoming sessions. The Stochastic Oscillator is in neutral 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 Sell

Sell in between 81.90-83.90 with stop loss at 83.90; targeting 81.00-80.50-78.90 and 78.00-77.50-76.30. Buy above 81.50-78.90 with risk daily closing below 78.90 and targeting 81.90-82.50 and 83.10-84.00.

 
Intraday Support Levels
S1     81.50-81.00
S2     80.50
S3     79.50-78.90

Intraday Resistance Levels
R1     81.90-82.50
R2     83.10
R3     84.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   73.485 Sell
20-DMA   77.81 Buy
50-DMA   74.14 Buy
100-DMA   71.08 Buy
200-DMA   65.75 Buy
STOCH(5,3)   74.130 Sell
MACD(12,26,9)   2.782 Buy

EUR/USD

AAFX TRADING

EUR/USD on Tuesday made an intraday low of US$1.1607/EUR, high of US$1.1668/EUR and settled the day up by 0.195% to close at US$1.1631/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 50DMA (1.1700), which become immediate resistance level, break above will target 1.1825. 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 neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Buy

Buy above 1.1590-1.1410 with risk below 1.1410, targeting 1.1640-1.1750-1.1800-1.1985 and 1.2050-1.2100. Sell below 1.1660-1.1910 targeting 1.1590-1.1550 and 1.1510-1.1460-1.1420 with stop-loss at daily closing above 1.1910.

 
Intraday Support Levels
S1     1.1590-1.1540
S2     1.1510
S3     1.1460-1.1420

Intraday  Resistance Levels
R1     1.1660-1.1750
R2     1.1800
R3     1.1850-1.1900

TECHNICAL INDICATORS
Name   Value Action
14DRSI   50.064 Buy
20-DMA   1.1626 Buy
50-DMA   1.1700 Sell
100-DMA   1.1824 Sell
200-DMA   1.1826 Sell
STOCH(5,3)   86.891 Buy
MACD(12,26,9)   -0.003 Buy

GBP/USD

AAFX TRADING

GBP/USD on Tuesday made an intra‐day low of US$1.3721/GBP, high of US$1.3832/GBP and settled the day up by 0.500% to close at US$1.3792/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.3760) 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 overbought territory and giving positive crossover to confirm bullish stance. MACD is above zero line but histograms are increasing lead to upward movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.3770-1.3560 with targets 1.3790-1.3860-1.3910 and 1.3950-1.3990 with stop loss closing below 1.3550. Sell in between 1.3800-1.3990 with targets at 1.3770-1.3710-1.3670 and 1.3610-1.3560 with stop loss should be 1.3790.

 
Intraday Support Levels
S1     1.3770-1.3710
S2     1.3670
S3     1.3610-1.3560

Intraday Resistance Levels
R1     1.3800-1.3860
R2     1.3910
R3     1.3950-1.3990

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

58.825

Buy
20-DMA   1.3665 Buy
50-DMA   1.3709 Buy
100-DMA   1.3760 Buy
200-DMA   1.3706 Buy
STOCH(5,3)   87.766 Buy
MACD(12,26,9)   -0.004 Sell

USD/JPY

AAFX TRADING

USD/JPY on Tuesday made intra‐day low of JPY113.87/USD and made an intraday high of JPY114.39/USD and settled the day up 0.0472% at JPY114.36/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

Long positions above 113.50-110.50 with targets of 114.20-114.90-115.60 and 116.00-116.90 with stop below 106.00. Sell below 114.20-116.90 with risk above 116.90 targeting 113.50-113.00-112.50 and 111.70-110.50-109.60.

 
Intraday Support Levels
S1     113.50-113.00
S2     112.50
S3     111.70-110.50

INTRADAY RESISTANCE LEVELS
R1     114.20-114.90
R2     115.50
R3     116.00-116.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   65.00 Buy
20-DMA   110.86 Sell
50-DMA   110.37 Sell
100-DMA   109.89 Sell
200-DMA   109.00 Sell
STOCH(9,6)   73.683 Buy
MACD(12,26,9)   -0.0131 Sell

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