AAFX TRADING

Daily Market Lookup

  • The dollar was down on Monday morning in Asia. Investors are awaiting central bank meetings from places such as Australia, the UK, and Europe. Analysts believe there is an over 90% chance that there will be at least four interest rate hikes by the end of 2022 and 67% chances of at least five. Meanwhile, the central bank’s governor will speak on Wednesday and a statement on monetary policy will be released on Friday. The week "will go far to define the psychology of the market for the next few months," Westpac analysts told Reuters. "That QE will cease will not be a surprise, so the real focus is on the RBA’s shifting economic view and its implications for the (benchmark) cash rate." The USD/CNY pair stay unchanged at 6.3610. Data released on Sunday showed that China’s January manufacturing purchasing managers index (PMI) was 50.1, and the non-manufacturing PMI was 51.1. The GBP/USD pair inched up 0.06% to 1.3412. The Bank of England (BOE) has a meeting on Thursday. Investors expect the BOE will increase the interest rate for the second time in less than two months. The country’s inflation surged to its highest point in nearly 30 years and the central bank phased out some stimulus policies in place since the start of the COVID-19 pandemic. Meanwhile, the European Central Bank (ECB) will also have a meeting on Thursday, but analysts do not expect any policy change.
  • The U.S. dollar lurched lower on Monday, stepping back from a 1-1/2 year high tested on Friday, as hawkish comments over the weekend by a Federal Reserve official sent the U.S. yield curve to its flattest levels in three months. While the Fed has clearly telegraphed a March interest rate hike after its meeting last week, some investors expect policymakers are preparing the markets for a faster pace of rate increases this year to check inflationary pressures. A quicker pace of rate hikes is also seen as dampening future growth expectations, a scenario that is playing out in the bond markets where spreads between two and ten-year U.S. Treasury yields fell below 59 bps for the first time since early November in a phenomenon known as "bear-flattening". Though markets are unsure on the impact of the expected Fed's rate hike trajectory on growth and inflation, some investors took the latest comments from Fed's Bostic as an opportunity to take profits on the dollar's rally in recent days. Market expectations of as many as five rate hikes this year "reflects the growing belief that the Fed is behind the curve in fighting upside inflation risks and will need to deliver more front-loaded tightening," Mizuho strategists said in a note. The Bank of England also holds its meeting on Thursday, with a Reuters poll of economists predicting a second rate hike in less than two months, as the BOE reverses more pandemic stimulus, after inflation jumped to its highest in nearly 30 years. The European Central Bank also has a policy meeting on Thursday. While no policy change is expected, analysts are starting to warn that approaching rate hikes from the Fed will shrink the ECB's window for action.
  • Gold was up on Monday morning in Asia, but the yellow metal is set for its biggest monthly drop since September 2021. Investors now await several central bank policy decisions that are due throughout the week. It has also fallen more than 2% so far in January. The U.S. Federal Reserve signaled interest rate hikes from March 2022 in its latest policy decision, handed down during the previous week. Investors now await policy decisions from the Reserve Bank of Australia, due on Tuesday. The European Central Bank and the Bank of England will also hand down their policy decision on Thursday. Elsewhere in Asia Pacific, China released data on Sunday that showed the manufacturing purchasing managers index (PMI) was 50.1 and the non-manufacturing PMI was 51.1, in January. The Caixin manufacturing PMI was 49.1. In neighboring Japan, data released earlier in the day showed that industrial production contracted 1% month-on-month, while retail sales grew 1.4% year-on-year, in December On the demand side, top Asian hubs such as China recorded firm demand for physical gold during the previous week as shoppers prepared for the Lunar New Year holiday. In India, buyers delayed purchases ahead of the country’s Union Budget, which will be handed down on Feb. 1.
  • Oil rose more than 1% on Monday to the near 7-year highs hit in the previous session, while supply concerns and political tension in Eastern Europe and the Middle East put prices on track for their biggest monthly gain in almost a year. The benchmarks recorded their highest levels since October 2014 on Friday, $91.70 and $88.84, respectively, and their sixth straight weekly gain. They were headed for about 17% gains this month, the most since February 2021. Major producers in the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, collectively known as OPEC+, have raised their output target each month since August by 400,000 barrels per day (bpd) as they unwind record production cuts made in 2020. But they have failed to meet their production targets as some members have struggled with capacity constraints. At its Feb. 2 meeting, OPEC+ is likely to stick with a planned rise in its oil output target for March, several OPEC+ sources told Reuters. Oil prices are showing signs of overheating as traders anticipate a severe shortage of petroleum this year, Reuters columnist John Kemp said, noting that inventories were already low and there was little global spare capacity to raise production in the short term. According to ANZ Research, with the market in deficit and inventories low, "supply constraints will likely induce a sizeable risk premium" as travel picks up after coronavirus curbs. Tensions between Russia and the West have also underpinned crude prices. Russia, the world's second-largest oil producer, and the West have been at loggerheads over Ukraine, fanning fears that energy supplies to Europe could be disrupted. Meanwhile, more than 1,400 U.S. flights were cancelled on Sunday after northeastern states were walloped a day earlier by a deadly winter storm that prompted several states to declare emergencies.

 

 
Intraday RESISTANCE LEVELS
31st January 2022 R1 R2 R3
GOLD-XAU 1,800-1,808 1,818 1,832-1,841
Silver-XAG 22.50-23.15 23.80 24.40-24.90¬
Crude Oil 87.00-87.90 88.20 89.00-89.50
EURO/USD 1.1150-1.1180 1.1230 1.1270-1.1320
GBP/USD 1.3440-1.3490 1.3530 1.3590-1.3640
USD/JPY 115.00-115.40 115.70 116.10-11680

Intraday SUPPORTS LEVELS
31st January 2022 S1 S2 S3
GOLD-XAU 1,783-1,777 1,770 1,764-1,758
Silver-XAG 22.10-21.90 21.50 21.05-19.50
Crude Oil 86.20-85.60 84.95 84.50-83.90
EURO/USD 1.1100-1.1050 1.1010 1.1950-1.0870
GBP/USD 1.3390-1.3350 1.3300 1.3270-1.3250
USD/JPY 114.65-114.05 113.70 113.20-112.70

Intra-Day Strategy (31st 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

old on Friday made its intraday high of US$1799.30/oz and low of US$1780.20/oz. Gold down 0.303% at US$1791.78/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 1832-1790 with risk below 1790, targeting 1840-1848-1854 and 1860-1870-1877. Sell in between 1841-1877 keeping stop loss closing above 1854, targeting 1834-1818-1808 and 1800-1790-1783.

 
Intraday Support Levels
S1     1,783-1,777
S2     1,770
S3     1,764-1,758
Intraday Resistance Levels
R1     1,800-1,808
R2     1,818
R3     1,832-1,841

Technical Indicators

Name   Value Action
14DRSI  

41.005

Buy
20-DMA   1814.38 Sell
50-DMA  

1808.53

Sell
100-DMA   1803.45 Sell
200-DMA   1801.18 Sell
STOCH(5,3)   13.940 Sell
MACD(12,26,9)   0.746 Buy

Silver - XAG

AAFX TRADING

Silver on Friday made its intraday high of US$22.80/oz and low of US$22.13/oz settled down by 1.296% at US$24.46/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 22.10-20.50, targeting 22.50-23.20-23.80 and 24.05-24.55-24.90 with stop loss should be place on the breakage below 20.10. Sell in between 22.50-25.50 with stop loss above 25.50; targeting 22.10-21.40-21.00 and 20.50-19.90-19.50.

 
Intraday  Support Levels
S1     22.10-21.90
S2     21.50
S3     21.05-19.50

Intraday  Resistance Levels
R1     22.50-23.15
R2     23.80
R3     24.40-24.90¬

TECHNICAL INDICATORS
Name   Value Action
14DRSI   41.607 Buy
20-DMA   23.16 Sell
50-DMA   23.15 Sell
100-DMA   23.43 Sell
200-DMA   23.88 Sell
STOCH(5,3)   15.891 Buy
MACD(12,26,9)   0.034 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Friday made an intra‐day high of US88.19/bbl, intraday low of US$85.84/bbl and settled down by 0.239% to close at US$86.66/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 87.00-89.50 with stop loss at 89.50; targeting 86.20-85.60-84.95 and 84.50-83.00-82.30. Buy above 86.20-83.90 with risk daily closing below 83.90 and targeting 87.00-87.90-88.20 and 89.00-89.50.

 
Intraday Support Levels
S1     86.20-85.60
S2     84.95
S3     84.50-83.90

Intraday Resistance Levels
R1     87.00-87.90
R2     88.20
R3     89.00-89.50

TECHNICAL INDICATORS
Name   Value Action
14DRSI   71.312 Sell
20-DMA   82.96 Buy
50-DMA   79.32 Buy
100-DMA   76.57 Buy
200-DMA   72.14 Buy
STOCH(5,3)   78.873 Buy
MACD(12,26,9)   2.930 Buy

EUR/USD

AAFX TRADING

EUR/USD on Friday made an intraday low of US$1.1120/EUR, high of US$1.1173/EUR and settled the day up by 0.088% to close at US$1.1148/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 1.1100-1.0870 with risk below 1.0870, targeting 1.1150-1.1180-1.1230 and 1.1270-1.1485-1.1525. Sell below 1.1230-1.1400, targeting 1.1190-1.1150-1.1090 and 1.1050-1.1010 with stop-loss at daily closing above 1.1650.

 
Intraday Support Levels
S1     1.1100-1.1050
S2     1.1010
S3     1.1950-1.0870

Intraday  Resistance Levels
R1     1.1150-1.1180
R2     1.1230
R3     1.1270-1.1320

TECHNICAL INDICATORS
Name   Value Action
14DRSI   33.485 Buy
20-DMA   1.1312 Sell
50-DMA   1.1352 Sell
100-DMA   1.1451 Sell
200-DMA   1.1587 Sell
STOCH(5,3)   11.685 Sell
MACD(12,26,9)   -0.004 Buy

GBP/USD

AAFX TRADING

GBP/USD on Friday made an intra‐day low of US$1.3364/GBP, high of US$1.3432/GBP and settled the day up by 0.150% to close at US$1.3400/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 1.3390-1.3250 with target 1.3440-1.3490-1.3530 and 1.3590-1.3640-1.3700 with stop loss closing below 1.3250. Sell in between 1.3440-1.3750 with targets at 1.3390-1.3350-1.3300 and 1.3270-1.3250 with stop loss should be 1.3790.

 
Intraday Support Levels
S1     ¬1.3390-1.3350
S2     1.3300
S3     1.3270-1.3250

Intraday Resistance Levels
R1     1.3440-1.3490
R2     1.3530
R3     1.3590-1.3640

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 Wednesday made intra‐day low of JPY115.11/USD and made an intraday high of JPY115.68/USD and settled the day up % at JPY115.32/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 114.90-116.50 with risk above 116.50 targeting 14.50-113.90 and 113.20-112.70-112.50. Long positions above 114.50-112.50 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     114.65-114.05
S2     113.70
S3     113.20-112.70

INTRADAY RESISTANCE LEVELS
R1     115.00-115.40
R2     115.70
R3     116.10-11680

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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