AAFX TRADING

Daily Market Lookup

  • The dollar inched higher at the start of a busy week of central bank meetings, including at the Federal Reserve, which are expected to drive currency markets and help the dollar, although concerns about the coronavirus weigh heavily on traders' minds. Moves were muted, however, compared with the last two weeks when news of the new coronavirus variant caused sharp swings in currencies along with other major asset classes. Investors initially rushed into safe-haven assets, although reports that Omicron may not be as bad as feared caused these flows to reverse last week. Breaking news about the Omicron variant aside, the most significant scheduled events for currency markets this week are central bank policy meetings, with six of the G10 central banks and a number of emerging-market central banks set to meet. The most important meeting is the Federal Reserve's two-day gathering which wraps up on Wednesday. Investors now expect the Fed to signal a faster tapering of asset buying this week, and thus an earlier start to rate hikes. It will also update the dot plots for rates over the next couple of years. If the Fed does as expected it would likely support the dollar, particularly versus currencies whose central banks will likely be slower to tighten. Both the European Central Bank and the Bank of Japan will review their policy settings this week. A Reuters poll of ECB-watchers predicts it will halve the amount of assets it buys each month from April, but that an interest rate rise is years away. Also holding meetings are the Norwegian and Swiss central banks and the Bank of England, which is expected to await further information on the economic impact of the new Omicron variant before hiking rates, a separate Reuter’s poll found. Bitcoin was trading a little under $50,000, off 2% on the day after climbing over the weekend. But the world's largest crypto currency still has work to do to reclaim November's record high of $69,000.
  • The dollar was up on Monday morning in Asia, starting the week off quietly ahead of a slew of key central bank policy decisions, including from the U.S. Federal Reserve, throughout the week. The GBP/USD pair edged down 0.16% to 1.3247, with the pound reacting to British Prime Minister Boris Johnson’s warning on Sunday that the U.K. faces a "tidal wave" of omicron COVID-19 cases, with two vaccine doses not enough to contain the variant. Markets have been volatile since omicron was discovered, due to concerns about its impact on economic recovery. However, reports that the variant may not be as bad as feared saw investors retreat from safe-haven assets last week. The Fed kicks off the central bank’s meetings on Wednesday, with six of the G10 central banks and a number of emerging-market central banks due to meet throughout the week. The Fed is expected to accelerate its asset tapering, and potentially speed up interest rate hikes. Investors now see a more than 50% chance of an interest rate hike by May 2022, according to the CME Group's (NASDAQ:CME) FedWatch program. The ECB, Bank of Japan, and the Bank of England will also hand down their policy decisions throughout the week.
  • Gold was up on Monday morning in Asia, as investors await key central bank policy decisions throughout the week and high U.S. consumer prices gave the yellow metal a boost. The dollar, which normally moves inversely to gold, also inched up on Monday ahead of around 20 central bank meetings, several of which will likely drive markets throughout the week. The Fed is widely expected to quicken the pace of asset tapering when it hands down its policy decision on Wednesday, which could also herald earlier-than-expected interest rate hikes. The European Central Bank (ECB), the Bank of England, and the Bank of Japan will also hand down their policy decisions later in the week. ECB could halve the number of assets it buys each month from April, said a Reuters poll. On the data front, Friday's U.S. consumer price index (CPI) grew 6.8% year on year and 0.8% month on month in November, while the core CPI grew 4.9% year on year and 0.5% month on month. This is the largest annual gain since 1982. Meanwhile, demand for physical gold was healthy in top Asian hubs last week, with domestic prices retreating into the year-end. However, rates volatility deterred retail buyers and jewelers in India.
  • Oil prices extended their rally on Monday as investor appetite improved amid growing relief the Omicron coronavirus variant may not cause severe illness and will likely have a limited impact on global fuel demand. Both benchmarks posted gains of about 8% last week, their first weekly gain in seven. They have recovered more than half the losses suffered since Omicron headlines first hit Nov. 25. South African scientists see no sign that the Omicron variant is causing more severe illness, they said on Friday, as officials announced plans to roll out vaccine boosters with daily infections approaching an all-time high. COVID-19 booster shots significantly restore protection against mild disease caused by the Omicron variant, UK health authorities said on Friday. Investors are closely watching the Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, at their next meeting on Jan. 4. They agreed earlier this month to stick to their existing policy of monthly oil output increases. Iraq's oil minister said on Sunday he expected OPEC at its next meeting to maintain its current policy of gradual monthly increases in supply by 400,000 bpd. The market reacted little to an announcement last Friday by the U.S. Department of Energy that it will sell 18 million barrels of crude oil from its strategic petroleum reserve (SPR) on Dec. 17, as part of a previous plan to try to reduce gasoline prices. Saudi Arabia, the world's biggest oil exporter, on Sunday forecast 2.9% GDP growth this year followed by 7.4% growth in 2022, according to a budget document. The kingdom does not disclose the oil price it assumes to calculate its budget, but Monica Malik, chief economist at Abu Dhabi Commercial Bank, estimated it was likely basing its budget for 2022 on an oil price assumption that could be as low as $50-$55 per barrel.

 

 
Intraday RESISTANCE LEVELS
13th December 2021 R1 R2 R3
GOLD-XAU 1,791-1,800 1,808 1,818-1,831
Silver-XAG 21.40-22.10 22.60 23.10-24.10
Crude Oil 73.00-73.50 74.70 75.50-76.00
EURO/USD 1.1340-1.1385 1.1420 1.1485-1.1510
GBP/USD 1.3270-1.3300 1.3390 1.3420-1.3490
USD/JPY ¬113.60-113.90 114.50 115.00-115.90

Intraday SUPPORTS LEVELS
13th December 2021 S1 S2 S3
GOLD-XAU 1,778-1,769 1,758 1,750-1,744
Silver-XAG 21.00-20.50 19.90 19.60-19.00
Crude Oil 72.30-71.50 70.60 70.10-69.10
EURO/USD 1.1280-1.1240 1.1170 1.1120-1.1050
GBP/USD 1.3200-1.3150 1.3100 1.3050-1.3010
USD/JPY 113.20-112.70 112.10 111.50-111.00

Intra-Day Strategy (13th December 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 Friday made its intraday high of US$1789.43/oz and low of US$1770.03/oz. Gold up 0.406% at US$1782.59/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 1778-1740 with risk below 1740, targeting 1790-1800 and 1808-1818-1834. Sell in between 1790-1818 keeping stop loss closing above 1820, targeting 1783-1774-1769 and 1758-1750.

 
Intraday Support Levels
S1     1,778-1,769
S2     1,758
S3     1,750-1,744
Intraday Resistance Levels
R1     1,791-1,800
R2     1,808
R3     1,818-1,831

Technical Indicators

Name   Value Action
14DRSI  

46.082

Buy
20-DMA   1791.54 Buy
50-DMA  

1794.0

Buy
100-DMA   1800.78 Buy
200-DMA   1800.07 Sell
STOCH(5,3)   21.940 Sell
MACD(12,26,9)   19.816 Buy

Silver - XAG

AAFX TRADING

Silver on Friday made its intraday high of US$22.22/oz and low of US$21.81/oz settled up by 0.892% at US$21.81/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 21.50-20.90, targeting 22.10-22.60-23.20 and 24.05-24.55-25.05 with stop loss should be place on the breakage below20.90. Sell in between 22.60-26.50 with stop loss above 26.50; targeting 22.10-21.40 and 21.00-20.50.

 
Intraday  Support Levels
S1     21.00-20.50
S2     19.90
S3     19.60-19.00

Intraday  Resistance Levels
R1     21.40-22.10
R2     22.60
R3     23.10-24.10

TECHNICAL INDICATORS
Name   Value Action
14DRSI   31.467 Buy
20-DMA   23.46 Sell
50-DMA   23.70 Sell
100-DMA   24.04 Sell
200-DMA   24.42 Sell
STOCH(5,3)   10.891 Buy
MACD(12,26,9)   -0.186 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Thursday made an intra‐day high of US$72.16/bbl, intraday low of US$70.17/bbl and settled up by 1.844% to close at US$71.96/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 73.00-76.00 with stop loss at 76.50; targeting 72.30-71.50-70.60 and 70.10-69.10-67.30. Buy above 72.30-69.10 with risk daily closing below 69.10 and targeting 73.00-73.80-74.70 and 75.50-76.00.

 
Intraday Support Levels
S1     72.30-71.50
S2     70.60
S3     70.10-69.10

Intraday Resistance Levels
R1     73.00-73.50
R2     74.70
R3     75.50-76.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   44.355 Sell
20-DMA   75.09 Sell
50-DMA   73.84 Buy
100-DMA   74.03 Buy
200-DMA   69.10 Buy
STOCH(5,3)   87.873 Buy
MACD(12,26,9)   0.933 Buy

EUR/USD

AAFX TRADING

EUR/USD on Friday made an intraday low of US$1.1264/EUR, high of US$1.1323/EUR and settled the day down by 0.1682% to close at US$1.1311/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 1.1280-1.1170 with risk below 1.1170, targeting 1.1360-1.1385-1.1420 and 1.1485-1.1510-1.1590. Sell below 1.1340-1.1540 targeting 1.1540 and 1.1310-1.1250-1.1200 and 1.1170-1.1120 with stop-loss at daily closing above 1.1540.

 
Intraday Support Levels
S1     1.1280-1.1240
S2     1.1170
S3     1.1120-1.1050

Intraday  Resistance Levels
R1     1.1340-1.1385
R2     1.1420
R3     1.1485-1.1510

TECHNICAL INDICATORS
Name   Value Action
14DRSI   45.042 Buy
20-DMA   1.1337 Sell
50-DMA   1.1453 Sell
100-DMA   1.1585 Sell
200-DMA   1.1700 Sell
STOCH(5,3)   63.685 Buy
MACD(12,26,9)   -0.007 Buy

GBP/USD

AAFX TRADING

GBP/USD on Friday made an intra‐day low of US$1.3186/GBP, high of US$1.3275/GBP and settled the day up by 0.400% to close at US$1.3272/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 1.3200-1.3050 with targets 1.3300-1.3390-1.3420 and 1.3490-1.3540 with stop loss closing below 1.3050. Sell in between 1.3270-1.3540 with targets at 1.3265-1.3200-1.3150 and 1.3100-1.3050 with stop loss should be 1.3790.

 
Intraday Support Levels
S1     1.3200-1.3150
S2     1.3100
S3     1.3050-1.3010

Intraday Resistance Levels
R1     1.3270-1.3300
R2     1.3390
R3     1.3420-1.3490

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

32.480

Buy
20-DMA   1.3403 Buy
50-DMA   1.3528 Buy
100-DMA   1.3631 Buy
200-DMA   1.3650 Buy
STOCH(5,3)   51.766 Buy
MACD(12,26,9)   -0.006 Sell

USD/JPY

AAFX TRADING

USD/JPY on Friday made intra‐day low of JPY113.78/USD and made an intraday high of JPY113.78/USD and settled the day down 0.0634% at JPY113.37/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 113.20-110.50 with targets of 113.45-113.90-114.20 and 114.90-115.60-116.00 with stop below 106.00. Sell below 113.60-115.90 with risk above 115.90 targeting 113.20-112.70-112.10 and 111.50-110.50.

 
Intraday Support Levels
S1     113.20-112.70
S2     112.10
S3     111.50-111.00

INTRADAY RESISTANCE LEVELS
R1     ¬113.60-113.90
R2     114.50
R3     115.00-115.90

TECHNICAL INDICATORS
Name   Value Action
14DRSI   65.340 Buy
20-DMA   114.25 Sell
50-DMA   113.18 Sell
100-DMA   111.96 Sell
200-DMA   110.46 Sell
STOCH(9,6)   94.683 Buy
MACD(12,26,9)   0.1202 Sell

AAFX TRADING
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