Top Trade Setups in Forex – New Home Sales In Focus
|On Wednesday, the U.S. stocks saw a 3% selloff for a second consecutive session after authorities warned of a coronavirus outbreak on American soil. The Dow Jones Industrial Average plunged 879 points (-3.2%) to 27081, the S&P 500 shed 97 points (-3.0%) to 3128, and the Nasdaq 100 lost 244 points (-2.7%) to 8834. The S&P 500 has returned to levels below all 20-day, 50-day, and 100-day moving averages.
The U.S. Centers for Disease Control (CDC) warned the public that the coronavirus outbreak on American soil is inevitable, saying that Americans should begin planning for a "significant disruption" in their daily lives. There are now 53 confirmed coronavirus cases in the U.S. Regarding U.S. economic data, the CB Consumer Confidence Index surged to 130.7 in February (132.2 expected).
XAU/USD - Profit Taking in Gold Triggers Selloff
Spot gold retreated 1.5% to $1,634 an ounce, as a 5% (78 dollars) rally in the prior five sessions lured investors into taking profits. The safe-haven-metal prices dropped for the 1st time in 11 sessions, halting its 10-days rally after found the stability in the market risk-sentiment.
Spot gold, which tracks live trades in bullion, was down $9.99, or 0.6%, at $1,650.43. Bullion struck $1,689 in the previous session, its highest since January 2013.
Stocks dropped because the U.S. Centers for Disease Control and Prevention said a spread of Covid-19 in the U.S. was sure and warned Americans to be ready for interruptions in their daily lives.
The fast-spreading coronavirus outside China, with new cases being reported in the U.S., Singapore, Germany, and several other European countries, investors are still careful due to looming risks to the global economic growth.
Recently, a broad-based U.S. dollar weakened due to a drop in the U.S. Treasury yields. While the Wall Street indices also supported gold to regain some footing. Despite the virus fears, gold extended its correction from a seven-year peak of $1689.40 and reached as low as 1625, as markets resorted to profit-taking after Monday's dramatic rise.
Looking forward, there won't be any meaningful macroeconomic data releases on Wednesday, and markets will remain focused on coronavirus headlines.
XAU/USD - Daily Technical Levels
|
Support |
Pivot Point |
Resistance |
|
1643.69 |
1666.54
|
1682.16 |
|
1628.07 |
1705.01 |
|
|
1589.6 |
1743.48 |
XAU/USD - Daily Trade Sentiment
The precious metal gold has traded selling mode to fill the huge gap and has nearly completed 50% Fibonacci retracement at 1,626 on the daily graph. As of now, the yellow metal gold has traded as we forecasted in our February 25 U.S. report.
Bearish break out of the 1,626 mark can send gold prices towards 61.8% Fibo levels 1,604 in the following days. On the shorter timeframe, gold is trading in the oversold zone, and it may give us a slight bullish correction unto 1,653 before presenting more selling.
USD/CAD - Triple Bottom Support Plays
The USD/CAD slipped 0.1% to 1.3283. The Canadian dollar climbed versus the U.S. dollar as the USD/CAD clawing back some of the previous day's declines ahead of a talk by a Bank of Canada executive, which could give hints on the bank's speculation about the economic influence of the coronavirus break.
The Bank of Canada Deputy Governor Timothy Lane is expected to deliver a speech on money and payments in the digital era. On Wednesday, the odds of an interest rate cut in the coming week has risen to about 30% from 10% in the wake of coronavirus spread outside of China. In addition to this, the Canadian government bond yields trimmed higher over the yield curve, with the 10-year yield climbing 1.5 basis points to 1.215%.
Oil prices stayed under pressure, as the coronavirus' global spreading is expected to dampen oil demand. U.S. Nymex crude oil futures fell a further 3.0% to $49.90 a barrel, and Brent was down 2.4% to $54.95 a barrel. Consequently, the USD/CAD is gaining bullish momentum.
USD/CAD- Daily Technical Levels
|
Support |
Pivot Point |
Resistance |
|
1.3261 |
1.3285
|
1.3317 |
|
1.3229 |
1.334 |
|
|
1.3174 |
1.3395 |
USD/CAD- Daily Trade Sentiment
The USD/CAD is consolidating in a tight trading range of 1.3270 - 1.3300. Violation of this range has the potential to drive a further trend in the USD/CAD pair. The USD/CAD is gaining strong support around 1.3270 area, and closing of candles above this level can lead USD/CAD prices towards the next resistance mark of 1.3325.
Taking a look at the 4-hour timeframe, the USD/CAD is also gaining support around 1.3270, which is ended by 50 EMA. The RSI and Stochastics are lingering in the neutral zone, as investors seem to wait for a solid reason to determine further movement in the USD/CAD.
AUD/USD – Bearish Channel Intact
The AUD/USD currency pair continues to trading bearish and hit the fresh 11-years low, near the 0.6570 regions in the last hour, mainly due to the on-going coronavirus fears. The AUD/USD is trading at 0.6577 and consolidates in the range between the 0.6570 - 0.6607.
The AUD/USD pair came under some selling pressure during the Asian session on Wednesday due to uncertainty over the coronavirus outbreak. Increasing market concerns about the outbreak of the deadly coronavirus and its impact on the Chinese economy is the key factor that kept exerting pressure on the China-proxy Australian Dollar.
Despite the modest recovery in the global risk sentiment, the buyers still unimpressed. The recovery in risk-tone usually tends to benefit perceived riskier currencies – like the Aussie.
The signs of stability in the global financial markets provided support to the U.S. Treasury bond yields, which eventually helped the USD to stop its recent corrective slide.
Looking forward, due to the lack of significant market-moving economic data scheduled to release on Wednesday, traders will keep their eyes on any fresh developments about the coronavirus for producing some meaningful trading opportunities.
AUD/USD - Technical Levels
|
Support |
Pivot Point |
Resistance |
|
0.6596 |
0.6617
|
0.6649 |
|
0.6564 |
0.667 |
|
|
0.6511 |
0.6723 |
AUD/USD - Daily Trade Sentiment
The AUD/USD is finally breaking below the horizontal double bottom support level of 0.6589. With a close of bearish candle below this level, the odds of selling trend continuation rises. On the lower side, the AUD/USD pair may head towards the next support area of 0.6530.
Both the RSI and 50 periods EMA are heading lower towards, suggesting further chances of a bearish trend in the AUD/USD. On the higher side, the immediate resistance can be seen around 0.6590 and 0.6620. Let's consider taking sell trades below 0.6590 to target 0.6530.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.