AAFX TRADING

Daily Market Lookup

  • The dollar crept higher on Wednesday as some of the biggest U.S. banks warned of an impending recession, which dampened appetite for riskier assets and kept the greenback in demand. Against a basket of currencies, the U.S. dollar index edged 0.07% higher to 105.62. It had risen nearly 0.3% overnight, extending a brief rally for a second straight session after upbeat U.S. services and factory data released at the start of the week pointed to underlying momentum in the world's largest economy. This supported the view that while the Federal Reserve may scale back the pace of its rate hikes, U.S. rates will remain higher for longer. Two European Central Bank (ECB) officials had signalled that inflation and rates may be close to peaking, ahead of the ECB's monetary policy meeting next week. The antipodean currency remained buoyed by a hawkish stance from the Reserve Bank of Australia, which on Tuesday signalled more rate hikes ahead to cool inflation, after it lifted its cash rate by 25 basis points to a 10-year high. In Asia, China's yuan firmed as the government announced a slew of measures that marked a sharp change to its tough, three-year-old zero-COVID policy that has battered its economy and sparked historic protests. China's national health authority said that asymptomatic COVID-19 cases and those with mild symptoms can self-treat while in quarantine at home. While some of the changes echoed similar shifts made by other countries many months ago, the announcement was the strongest sign so far that China is preparing its people to live with the disease, though analysts say the path to fully reopening the economy will be long and bumpy, and not without risk. The optimism over further easing of China's strict COVID-19 restrictions outweighed its dismal trade data released earlier in the day, which showed that the country's exports and imports shrank at a much steeper-than-expected pace in November,as a result of feeble global and domestic demand, COVID-induced production disruptions and a property slump at home.
  • The U.S. dollar climbed in early European trade Wednesday, as increased recessionary concerns hit risk sentiment, boosting this safe haven. The dollar suffered its worst monthly performance in November since September 2010, dropping 5% on optimism that the U.S. Federal Reserve is set to slow the pace of its rate hikes, likely resulting in a soft landing for the U.S. economy. However, sentiment is changing, and the dollar is receiving a bid again as traders factor in the growing threat of recession, primarily in the U.S. JPMorgan Chase CEO Jamie Dimon summed up these concerns in an interview with CNBC on Tuesday, saying that spending from the pandemic stimulus programs is still propping up the U.S. economy. Consumers still have $1.5 trillion in excess savings from these programs, but that “will run out sometime mid-year next year,” Dimon said. “When you’re looking out forward, those things may very well derail the economy and cause a mild or hard recession that people worry about.” The European Central Bank meets next week and is widely expected to increase interest rates again to try and contain inflation, having raised rates by a combined 200 basis points since July. That said, ECB policymaker Constantinos Herodotou said on Tuesday that the bank’s interest rates are now "very near" their neutral level. The Bank of England has regularly increased interest rates this year to try and contain inflation rising at double digits, hitting discretionary spending in the country. This overshadowed the release of data earlier Wednesday which showed the country’s foreign trade was in its worst state since 2020 when trade was hit by the first COVID lockdown.
  • Oil futures were little changed in Asia on Wednesday as hopes of improved Chinese demand offset uncertainty about how a Western cap on Russian oil prices would play out, keeping markets on edge after a sharp fall in the previous session. Expectations of rising China demand continued to be a positive driver, as the country posted fewer new COVID-19 infections for the second consecutive day and announced sweeping changes in its tough anti-virus policy. China's national health authority said on Wednesday that asymptomatic COVID-19 cases and those with mild symptoms can quarantine at home, in the strongest sign so far that China is preparing its people to live with the disease. Data earlier on Wedneday showed China's crude oil imports in November rose 12% from a year earlier to their highest in 10 months, as companies replenished stocks with cheaper oil and as new plants started up. A potential drawdown in U.S. crude stockpiles of around 6.4 million barrels, according to API figures, also gave some sentiment support on the supply front. However, uncertainty on how the price cap on Russian oil would impact supply contributed to volatility. Russia is considering three options, including banning oil sales to some countries and setting maximum discounts at which it would sell its crude, to counter the price cap imposed by Western powers, the Vedomosti daily reported on Wednesday. Some weakness was attributed to a stronger greenback, after it firmed from the earlier session, and cautious activity in Asian stock markets. Wall Street benchmarks also tumbled on Tuesday on uncertainty around the direction of Federal Reserve rate hikes and further talk of a looming recession. Those fears were sparked by strong economic data or hawkish signals from other policymakers. Oil prices have dropped by more than 1% for three straight sessions, giving up most of their gains for the year. Some optimism remained that buyers could come back if the market bottoms out amid a contango price structure, where forward prices are higher than prompt prices.

 

 
Intraday RESISTANCE LEVELS
7th December 2022 R1 R2 R3
GOLD-XAU 1,774-1,790 1,800-1,808 1,814-1,826
Silver-XAG 22.50-23.00 23.30-23.60 24.00-24.40
Crude Oil 75.25 76.10 77.00 77.90-78.70
EURO/USD 1.0490--1.0520 1.0570-1.0610 1.0650-1.0720
GBP/USD 1.2280-1.2350 1.2410-1.2490 1.2550-1.2630
USD/JPY 137.00 137.70-138.10 139.00-140.20

Intraday SUPPORTS LEVELS
7th December 2022 S1 S2 S3
GOLD-XAU 1,759-1,750 1,736 1,724-1,716
Silver-XAG 22.20-21.90 21.10 20.70-20.40
Crude Oil 74.10-73.55 72.60 71.90-71.00
EURO/USD 1.0450-1.0390 1.0320-1.0290 1.0160
GBP/USD 1.2200-1.2120 1.2090 1.2030-1.1950
USD/JPY 136.50-136.00 135.40-134.90 134.10-133.50

Intra-Day Strategy (7th December 2022)
GOLD-XAU Sell on Strength
Silver-XAG Buy on Dips
Crude Oil Neutral to Sell
EUR/USD Neutral to Sell
GBP/USD Neutral to Buy
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Tuesday made its intraday high of US$1780.77/oz and low of $1767.23/oz. Gold is up by 0.131% at US$1770.89/oz.

Technicals in Focus:

In daily charts, prices are above 200DMA (1809) and breakage below will call for 1790. MACD is above the zero line and histograms are a2lso increasing trend and it will bring an upward stance in the upcoming sessions. RSI is in the overbought region and more upside is expected before it gets stretched. The Stochastic Oscillator is in neutral territory and giving a negative crossover to a bearish stance for intraday trade.

Trading Strategy: Sell on Strength

Sell below 1774-1826 keeping stop loss closing above 1826, targeting 1759 and 1750-1736-1724. Buy in between 1759-1724 with risk below 1700, targeting 1774-1790-1800 and 1808-1814-1826.

 
Intraday Support Levels
S1     1,759-1,750
S2     1,736
S3     1,724-1,716
Intraday Resistance Levels
R1     1,774-1,790
R2     1,800-1,808
R3     1,814-1,826

Technical Indicators

Name   Value Action
14DRSI  

58.852

Buy
20-DMA   1753.27 Buy
50-DMA  

1727.13

Buy
100-DMA   1732.25 Buy
200-DMA   1759.97 Buy
STOCH(5,3)   34.205 Buy
MACD(12,26,9)   20.928 Buy

Silver - XAG

AAFX TRADING

Silver on Wednesday made its intraday high of US$22.59/oz and low of US22.01/oz settled down by 0.238% at US$22.18/oz.

Technicals in Focus:

On daily charts, silver is sustaining below 100DMA (26.62), breakage above will lead to 27.60. MACD is below the zero line and histograms are decreasing trend and it will bring a bearish stance in the upcoming sessions. RSI is approaching the neutral region, indicating a buy signal for now. The Stochastic Oscillator is in the oversold region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 22.20-20.30, targeting 22.50-23.30-23.60 and 24.00-24.40-25.00 with stop loss should be placed on the breakage below 20.00. Sell in between 23.40-25.00 with stop loss above 25.00; targeting 22.10-21.70 and 21.30-20.70-20.10.

 
Intraday  Support Levels
S1     22.20-21.90
S2     21.10
S3     20.70-20.40

Intraday  Resistance Levels
R1     22.50-23.00
R2     23.30-23.60
R3     24.00-24.40

TECHNICAL INDICATORS
Name   Value Action
14DRSI   60.367 Buy
20-DMA   21.55 Buy
50-DMA   20.72 Buy
100-DMA   20.48 Buy
200-DMA   21.04 Buy
STOCH(5,3)   64.901 Sell
MACD(12,26,9)   0.671 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Friday made an intra‐day high of US$77.96/bbl, an intraday low of US$73.54/bbl, and settled down by 3.28% to close at US$74.59/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 the zero line and histograms are in increasing mode will bring a bullish stance in the upcoming sessions. The Stochastic Oscillator is in the neutral region, giving a positive crossover for confirmation of a bullish stance; while the RSI is in the 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 75.25-81.60 with stop loss at 81.60; targeting 74.10-73.55-72.60 and 71.90-71.00. Buy above 74.10-71.00 with risk daily closing below 71.00; targeting 75.25-76.10-77.00 and 77.90-78.70-79.60.

 
Intraday Support Levels
S1     74.10-73.55
S2     72.60
S3     71.90-71.00

Intraday Resistance Levels
R1     75.25 76.10
R2     77.00
R3     77.90-78.70

TECHNICAL INDICATORS
Name   Value Action
14DRSI   34.634 Sell
20-DMA   79.95 Buy
50-DMA   83.20 Buy
100-DMA   86.86 Sell
200-DMA   88.89 Sell
STOCH(5,3)   11.334 Sell
MACD(12,26,9)   -2.419 Buy

EUR/USD

AAFX TRADING

EUR/USD on Tuesday made an intraday low of US$1.0459/EUR, a high of US$1.0532/EUR, and settled the day up by 0.397% to close at US$1.0461/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.0736), which becomes immediate support, a break below will target 1.0647. MACD is above the zero line and histograms are increasing mode which will bring a bullish view. Stochastic is in overbought territory and giving positive crossovers to the bullish outlook for intraday. 14D RSI is currently in a neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.0490-1.0720, targeting 1.0450 and 1.0390-1.0290-1.0210 with stop-loss at daily closing above 1.0545. Buy above 1.0450-1.0290 with risk below 1.0290 targeting 1.0490-1.0570-1.0610-1.0650 and 1.0720-1.0770.

 
Intraday Support Levels
S1     1.0450-1.0390
S2     1.0320-1.0290
S3     1.0160

Intraday  Resistance Levels
R1     1.0490--1.0520
R2     1.0570-1.0610
R3     1.0650-1.0720

TECHNICAL INDICATORS
Name   Value Action
14DRSI   64.432 Buy
20-DMA   1.0319 Sell
50-DMA   1.0159 Buy
100-DMA   1.0163 Buy
200-DMA   1.0387 Buy
STOCH(5,3)   83.42 Buy
MACD(12,26,9)   0.0126 Buy

GBP/USD

AAFX TRADING

GBP/USD on Tuesday made an intra‐day low of US$1.2126/GBP, a high of US$1.2268/GBP, and settled the day down 0.410% to close at US$1.2132/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 20DMA (1.2113) is becoming a resistance level. 14-D RSI is currently in a neutral region and direction is difficult to predict on RSI bases. The Stochastic Oscillator is in overbought territory and gives a positive crossover to confirm bullish a stance. MACD is above the zero line but histograms are increasing leading to movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.2200-1.1950 with a target of 1.2280-1.2350-1.2410 and 1.2490-1.2250-1.2630 with a stop loss closing below 1.1950. Sell in between 1.2280-1.2630 with targets at 1.2200-1.2190-1.2090 and 1.2030-1.1950-1.1870 with stop loss should be 1.2630.

 
Intraday Support Levels
S1     1.2200-1.2120
S2     1.2090
S3     1.2030-1.1950

Intraday Resistance Levels
R1     1.2280-1.2350
R2     1.2410-1.2490
R3     1.2550-1.2630

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

63.457

Buy
20-DMA   1.1957 Buy
50-DMA   1.1740 Buy
100-DMA   1.1778 Buy
200-DMA   1.2103 Buy
STOCH(5,3)   74.467 Buy
MACD(12,26,9)   0.0014 Sell

USD/JPY

AAFX TRADING

USD/JPY on Monday made an intra‐day low of JPY134.12/USD and made an intraday high of JPY135.98/USD and settled the day up by 0.706% at JPY136.70/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 the overbought region and chances of downward are expected based on RSI. MACD is above the 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 a negative crossover to confirm a bearish stance.

Trading Strategy: Neutral to Sell

Sell below 137.00-144.50 with risk above 144.50 targeting 136.60-136.00-135.40-134.90. Long positions above 136.50-133.60 with targets of 137.00-137.70 and 138.10-139.00-140.20 with stops below 143.00.

 
Intraday Support Levels
S1     136.50-136.00
S2     135.40-134.90
S3     134.10-133.50

INTRADAY RESISTANCE LEVELS
R1     137.00
R2     137.70-138.10
R3     139.00-140.20

TECHNICAL INDICATORS
Name   Value Action
14DRSI   34.408 Buy
20-DMA   141.65 Buy
50-DMA   142.80 Buy
100-DMA   140.63 Buy
200-DMA   134.90 Buy
STOCH(9,6)   14.057 Buy
MACD(12,26,9)   -1.290 Sell

AAFX TRADING
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