AAFX TRADING

Daily Market Lookup

  • The dollar clung to a late week bounce on Monday as investors braced for January's U.S. Federal Reserve meeting and raised bets it will chart a year ahead containing several rate hikes, while China cut borrowing costs to support a stuttering economy. A Bank of Japan meeting which concludes on Tuesday, British inflation data on Wednesday and Australian jobs figures on Thursday are also in view as traders gauge the global policy outlook. An unexpected cut to some key lending rates in China highlighted it as the outlier, though it only briefly weighed on the yuan. The moves follow a jump in yields and the dollar on Friday and underscore support for the greenback from the hawkish rates outlook, even if momentum for gains has started to wane. He said it may not necessarily return to drive new dollar highs, but reckoned traders were on guard. "We've had a hawkish twist out of every Fed meeting since June last year," he said. The Fed meets Jan. 25-26 and is not expected to move rates, but there is a growing drumbeat of hawkish comments coming from within and outside the central bank. Tugging against dollar gains is momentum for tightening almost everywhere else too, with Reuters reporting last week that even the ultra-accommodative Bank of Japan is debating how soon to begin telegraphing hike plans. Inflation data on Wednesday could also help extend a month-long rally in sterling after it stalled around its 200-day moving average last week. It held at $1.3669 on Monday. The outlier is China, where growth data on Monday confirmed coronavirus restrictions were dragging on consumption and policymakers also announced a surprise cut to borrowing costs The People's Bank of China (PBOC) said it was lowering the interest rate on $110 billion worth of one-year medium-term loans by 10 basis points, surprising analysts who now reckon it is a harbinger of more to come. Investors are also looking ahead to the U.S. Federal Reserve's January policy decision and the timetable for interest rate hikes. Chinese bonds rose, while the yuan fell after the PBOC cut borrowing costs for medium-term loans for the first time since April 2020. Ten-year government bond futures rose to their highest since June 2020 after the move, and the yuan began onshore trade marginally softer at 6.3555 per dollar. Meanwhile, the dollar's move follows its jump on Friday along with U.S. yields. The hawkish interest rate provided support for the U.S. currency even as momentum for gains started to wane. Investors are also looking ahead to the Fed’s next policy decision, due to be handed down on Jan. 26. J.P. Morgan CEO Jamie Dimon remarked that there could be "six or seven" interest rate hikes in 2022, while hedge fund manager Bill Ackman floated tweeted over the weekend that he expects an initial 50 basis point hike. U.S. markets are closed for a holiday on Monday, but benchmark 10-year futures were sold to a two-year low, and Fed funds futures also fell. Elsewhere a month-long rally for sterling petered out, but some investors believe it could resume gains should inflation data prompt the Bank of England (BOE) to hike interest rates.
  • Gold was up on Monday morning in Asia, while U.S. Treasury yields rose thanks to hawkish signals from the U.S. Federal Reserve. Markets are also beginning to price in a sooner-than-anticipated reduction in the Fed’s balance sheet. In his U.S. Senate Banking Committee hearing that took place during the previous week, Fed Chairman Jerome Powell said that the U.S. economy is ready for the start of tighter monetary policy. Other Fed officials have also indicated that the central bank is likely to hike interest rates in March 2022. The Fed will meet to hand down its next policy decision on Jan. 25 to 26, while the Bank of England will hand down its decision on Feb. 3. In Asia Pacific, the Bank of Japan will hand down its latest policy decision on Tuesday. Elsewhere in the region, Chinese data released earlier in the day showed that the GDP grew 4% year-on-year and 1.6% quarter-on-quarter in the fourth quarter of 2021. It also showed that industrial production grew 4.3% year-on-year and retail sales grew 1.7% year-on-year in December, while the unemployment rate was at 5.1%. The People’s Bank of China, in a surprise move, also cut borrowing costs for medium-term loans for the first time since April 2020. Meanwhile, physical gold buying dropped in India during the previous week thanks to rising prices and numbers of COVID-19 cases. In China, a top consumer of the yellow metal, demand stabilized as the Lunar New Year holiday approaches.
  • Oil prices rose on Monday, with Brent futures touching their highest in more than three years, as investors bet supply will remain tight amid restrained output by major producers with global demand unperturbed by the Omicron coronavirus variant. Frantic oil buying, driven by supply outages and signs the Omicron variant will not be as disruptive as feared for fuel demand, has pushed some crude grades to multi-year highs, suggesting the rally in Brent futures could be sustained a while longer, traders said. The Organization of the Petroleum Exporting Countries, Russia and their allies, together known as OPEC+, are gradually relaxing output cuts implemented when demand collapsed in 2020. But many smaller producers cannot raise supply and others have been wary of pumping too much oil in case of renewed COVID-19 setbacks. Festering geopolitical threats to supply are also supporting bullish sentiment, Hari said. U.S. officials voiced fears on Friday that Russia was preparing to attack Ukraine if diplomacy failed. Russia, which has amassed 100,000 troops on Ukraine's border, released pictures of its forces on the move. The U.S. government has held talks with several international energy companies on contingency plans for supplying natural gas to Europe if conflict between Russia and Ukraine disrupts Russian supplies, two U.S. officials and two industry sources told Reuters on Friday U.S. crude oil stockpiles, meanwhile, fell more than expected to their lowest since October 2018, but gasoline inventories surged due to weak demand, the Energy Information Administration said on Wednesday. Concerns over supply constraints outweighed the news of China's possible oil release from reserves, Fujitomi analyst Tazawa said. Sources told Reuters China plans to release oil reserves around the Lunar New Year holidays between Jan. 31 and Feb. 6 as part of a plan coordinated by the United States with other major consumers to reduce global prices.

 

 
Intraday RESISTANCE LEVELS
17th January 2022 R1 R2 R3
GOLD-XAU 1,832-1,841 1,848 1,860-1,872
Silver-XAG 23.15-23.80 24.50 24.90-25.50
Crude Oil 83.90-84.50 84.95 85.60-86.20
EURO/USD 1.1485-1.1525 1.1590 1.1620-1.1650
GBP/USD 1.3700-1.3750 1.3800 1.3840-1.3890
USD/JPY 113.90-114.20 114.65 115.00-115.50

Intraday SUPPORTS LEVELS
17th January 2022 S1 S2 S3
GOLD-XAU 1,818-1,808 1,790 1,784-1,778
Silver-XAG 22.50-22.10 21.40 23.15-23.80
Crude Oil 83.00-82.30 81.5083.00-82.30 81.00-80.20
EURO/USD 1.1420-1.1385 1.1320 1.1270-1.1230
GBP/USD 1.3650-1.3590 1.3550 1.3490-1.3400
USD/JPY 113.20-112.70 112.50

Intra-Day Strategy (17th January 2022)
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$1829.05/oz and low of US$1814.59/oz. Gold down 0.239% at US$1817.89/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 1805-1778 with risk below 1778, targeting 1818-1824-1834 and 1840-1848-1854. Sell in between 1818-1854 keeping stop loss closing above 1854, targeting 1800-1790 and 1783-1774-1769.

 
Intraday Support Levels
S1     1,818-1,808
S2     1,790
S3     1,784-1,778
Intraday Resistance Levels
R1     1,832-1,841
R2     1,848
R3     1,860-1,872

Technical Indicators

Name   Value Action
14DRSI  

58.253

Buy
20-DMA   1808.99 Buy
50-DMA  

1802.53

Buy
100-DMA   1799.36 Buy
200-DMA   1798.94 Buy
STOCH(5,3)   92.940 Buy
MACD(12,26,9)   6.816 Buy

Silver - XAG

AAFX TRADING

Silver on Friday made its intraday high of US$23.29/oz and low of US$22.81/oz settled down by 0.446% at US$22.96/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 22.50-20.50, targeting 23.20-23.80-24.05 and 24.55-24.90-25.50 with stop loss should be place on the breakage below 20.10. Sell in between 23.15-25.50 with stop loss above 25.50; targeting 22.50-21.40-21.00 and 20.50-19.90-19.50.

 
Intraday  Support Levels
S1     22.50-22.10
S2     21.40
S3     23.15-23.80

Intraday  Resistance Levels
R1     23.15-23.80
R2     24.50
R3     24.90-25.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   36.673 Buy
20-DMA   22.70 Sell
50-DMA   23.24 Sell
100-DMA   24.17 Sell
200-DMA   24.17 Sell
STOCH(5,3)   54.891 Buy
MACD(12,26,9)   -0.186 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Friday made an intra‐day high of US81.19/bbl, intraday low of US$81.07/bbl and settled up by 2.987d% to close at US$83.62/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 83.90-86.20 with stop loss at 86.20; targeting 83.00-82.30-81.80 and 81.00-80.20-79.00. Buy above 83.00-80.20 with risk daily closing below 80.20 and targeting 83.90-84.50-84.95 and 85.60-86.30.

 
Intraday Support Levels
S1     83.00-82.30
S2     81.5083.00-82.30
S3     81.00-80.20

Intraday Resistance Levels
R1     83.90-84.50
R2     84.95
R3     85.60-86.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   66.2822 Sell
20-DMA   75.31 Buy
50-DMA   75.31 Buy
100-DMA   74.27 Buy
200-DMA   70.34 Buy
STOCH(5,3)   85.873 Buy
MACD(12,26,9)   -0.535 Buy

EUR/USD

AAFX TRADING

EUR/USD on Friday made an intraday low of US$1.1397/EUR, high of US$1.1482/EUR and settled the day down by 0.390% to close at US$1.1408/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 1.1420-1.1120 with risk below 1.1120, targeting 1.1485-1.1525-1.1590 and 1.1620-1.1650. Sell below 1.1485-1.1650, targeting 1.1420-1.1385-1.1310 and 1.1250-1.1200-1.1170 with stop-loss at daily closing above 1.1650.

 
Intraday Support Levels
S1     1.1420-1.1385
S2     1.1320
S3     1.1270-1.1230

Intraday  Resistance Levels
R1     1.1485-1.1525
R2     1.1590
R3     1.1620-1.1650

TECHNICAL INDICATORS
Name   Value Action
14DRSI   41.652 Buy
20-DMA   1.1322 Sell
50-DMA   1.1433 Sell
100-DMA   1.1567 Sell
200-DMA   1.1688 Sell
STOCH(5,3)   44.685 Buy
MACD(12,26,9)   -0.004 Buy

GBP/USD

AAFX TRADING

GBP/USD on Friday made an intra‐day low of US$1.3652/GBP, high of US$1.3742/GBP and settled the day down by 0.235% to close at US$1.3671/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 1.3700-1.3490 with target 1.3750-1.3800-1.3840 and 1.3890-1.3950 with stop loss closing below 1.3950. Sell in between 1.3750-1.3950 with targets at 1.3550-1.3490-1.3440 and 1.3390-1.3300-1.3265 with stop loss should be 1.3790.

 
Intraday Support Levels
S1     1.3650-1.3590
S2     1.3550
S3     1.3490-1.3400

Intraday Resistance Levels
R1     1.3700-1.3750
R2     1.3800
R3     1.3840-1.3890

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

63.834

Buy
20-DMA   1.3466 Buy
50-DMA   1.3453 Buy
100-DMA   1.3530 Buy
200-DMA   1.3588 Buy
STOCH(5,3)   85.766 Buy
MACD(12,26,9)   -0.003 Sell

USD/JPY

AAFX TRADING

USD/JPY on Friday made intra‐day low of JPY113.47/USD and made an intraday high of JPY114.25/USD and settled the day down 0.0306% at JPY114.19/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 114.65-116.50 with risk above 116.50 targeting 14.50-113.90 and 113.20-112.70-112.50. Long positions above 114.20-112.50 with targets of 114.65-115.00-115.50 and 116.00-116.50-116.90 with stop below 112.50.

 
Intraday Support Levels
S1     113.20-112.70
S2     112.50
S3    

INTRADAY RESISTANCE LEVELS
R1     113.90-114.20
R2     114.65
R3     115.00-115.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   46.1338 Buy
20-DMA   114.84 Sell
50-DMA   114.19 Buy
100-DMA   113.17 Buy
200-DMA   111.59 Buy
STOCH(9,6)   11.683 Sell
MACD(12,26,9)   0.0102 Sell

AAFX TRADING
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