Top trade setups in forex – Risk-off sentiment driving the market
|The U.S. stocks surged over 7%, as market sentiment was boosted by signs that the coronavirus pandemic eased in hot spots in the U.S. and Europe. The Dow Jones Industrial Average jumped 1627 points (+7.7%) to 22680, the S&P 500 rose 175 points (+7.0%) to 2663, and the Nasdaq 100 was up 553 points (+7.4%) to 8081.
Shares in Consumer Services (+11.19%), Automobiles & Components (+10%) and Consumer Durables & Apparel (+9.93%) sectors were market leaders. PVH Corp (+28.1%), Capri Holdings (+25.9%), Nordstrom (+24.1%), Kohls Corp (+22.9%) and MGM Resorts (+22.0%) showed significant gains.
XAU/USD - Bearish Retracement In-Play
Gold is trading slightly bearish around 1,651 area, as it seems to go after a retracement. A day before, the precious metal gold rallied 42 dollars, or 2.6%, to $1,662 an ounce, the highest level in over seven years. Most of the buying in the gold market was driven by sell-off in the stock market.
Overall, around 9% of stocks in the S&P 500 Index were trading above their 200-day moving average, and 33.3% were trading above their 20-day moving average. The VIX Index dropped 1.56 points (-3.33%) to 45.24.
European stocks posted a strong rebound, with the Stoxx Europe 600 Index surging 3.7%. Germany's DAX jumped 5.8%, France's CAC rose 4.6%, and the U.K.'s FTSE 100 was up 3.1%.
On the other hand, the U.S. government bonds fell in price as investors' risk appetite grew. The benchmark 10-year U.S. Treasury yield gained 8.8 basis points to 0.675%.
During the U.S. Session, eyes will remain on the U.S. Labor Department, which is due to report JOLTS job openings for February (6.5 million expected). The Federal Reserve will post February consumer credit (+14.0 billion anticipated dollars).
XAU/USD - Daily Technical Levels
|
Support |
Pivot Point |
Resistance |
|
1628.08 |
1651.78 |
1687.6 |
|
1592.25 |
1711.3 |
|
|
1532.73 |
1770.83 |
XAU/USD - Daily Trade Sentiment
Gold has disrupted the sideways range of 1,640 - 1,608 due to boosted demand for safe-haven assets. Moreover, weaker than expected, NFP, along with the surge in COVID19 cases, is keeping the risk sentiment off, driving bullish bias in the market.
Gold is now expected to find next resistance near 1,671, and the breakout of this level may lead to gold prices towards 1,689. Alternatively, the support stays at 1,650. Gold's trading bias remains strongly bullish as gold has closed a bullish engulfing pattern on the daily chart, which may keep buyers urged to stay in business.
USD/CAD - Descending Triangle Patter In Focus
The USD/CAD currency pair is flashing red and dropped to 1.4011, mainly due to modest declines in the greenback. The fresh surge in crude oil prices in the wake of the strong sentiment of the Saudi-Russian deal strengthened the commodity Canadian dollar currency, which keeps the pair lower.
The USD/CAD pair is trading at 1.4024 and consolidates in the range between the 1.4011 - 1.4143. As per Russian Direct Investment Fund's chief executive, Russia and Saudi Arabia are "very, very close" to an agreement to cut production. Therefore, I think the entire market can understand that this agreement of cut production is important enough, and it will bring lots of stability in the market. Notably, the high expectations of Russia/Saudi deal providing support to the oil prices.
At the USD front, the U.S. dollar losing its bullish momentum on the day, mainly due to the risk recovery sentiment in the market. The fresh stimulus package hints from the U.S. also keeps the USD lower.
On the other hand, the eased fear of coronavirus is also the reason behind the risk-on market sentiment. While the declining figures from Spain, Italy, and the U.K., the recent decline in the British death losses from the top of April 04 figures of 708 to 439, which is providing support to the oil market.
USD/CAD- Daily Technical Levels
|
Support |
Pivot Point |
Resistance |
|
1.4068 |
1.4127 |
1.4172 |
|
1.4023 |
1.4231 |
|
|
1.3919 |
1.4335 |
USD/CAD- Daily Trade Sentiment
The USD/CAD is trading bearish at 1.4008, but still staying in the same trading range market of 1.4245 - 1.4080. On the 4 hour timeframe, the USD/CAD pair continues to trade within a descending triangle pattern, which is likely to support the USD/CAD pair at 1.3990. The USD/CAD may find resistance around 1.4200, which is extended by the descending triangle pattern. Typically, these descending triangle patterns violate on the downside. Thus the pair may slip downward, especially if 1.3990 level gets broken. Below 1.3990, the USD/CAD pair may exhibit another dip until the next support level of 1.3735. Let's look for sell trades below 1.4015 today.
AUD/USD – Triple Top Pattern
The AUD/USD continued its winning streak for 2nd consecutive session and rose to 0.6194 level and now struggling toward the 0.6200 round-figure marks mainly due to the broad-based greenback weakness. The fresh recovery in the equity market is also giving support to the perceived riskier currencies like the Australian dollar, which keeps the pair higher. The AUD/USD is trading at 0.6187 and consolidates in the range between the 0.6076 - 0.6194.
It seems like; traders have turned confident due to the decreasing number of new coronavirus cases, which is the reason behind the risk-on market sentiment. While the declining figures from Spain, Italy, and recent decline in the British death losses from the top of April 04, figures of 708 to 439 were providing support to the market and weakened the Japanese yen's safe-haven status.
While the risk-on market tone sent the greenback lower and collaborated with the pair's ongoing positive momentum, moreover, the Australian dollar got an additional boost from the latest RBA monetary policy decision to leave its official cash rate at a record low of 0.25%.
Lastly, the risk-on market sentiment could also be attributed to the fresh pickup in the U.S. Treasury bond yields. The United States President Donald Trump is also showing a readiness to declare another aid package after the House Speaker Nancy Pelosi gave hints for the same. As in result, the risk sentiment got boost, and chances of additional stimulus are weakening the U.S. dollar, driving the bullish trend in the AUD/USD pair.
AUD/USD - Technical Levels
|
Support |
Pivot Point |
Resistance |
|
0.6042 |
0.6083 |
0.6159 |
|
0.5966 |
0.6199 |
|
|
0.5849 |
0.6316 |
AUD/USD - Daily Trade Sentiment
On Tuesday, the AUD/USD is trading with a bullish bias, and it seems to test the triple top resistance level of 0.6200. Aussie is getting strong in the wake of a steady policy statement from the RBA. The AUD/USD is trying to violate the choppy range of 0.6205 - 0.6025, and if it manages to do so, we may see it's price soaring toward the next resistance level of 0.6290 and even higher towards 0.6325.
Closing of candles over 50 EMA is suggesting bullish bias, and it should lead the AUD/USD prices higher. However, the EMA also extends support around 0.6080 level. Let's look for placing bullish trades over 0.6200 and selling below the same. All the best for the U.S. Session!
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