Top Trade Setups in Forex – Rangebound Market Ready to Play!

The U.S. stock market encountered a 7% crash amid heightened coronavirus fears and diving oil prices. At the session, open stocks dropped so much (-7%) as to trigger a circuit breaker that froze trading for 15 minutes, the first time in 23 years.

The Dow Jones Industrial Average fell 2013 points (-7.8%) to 23851, marking its worst point-loss in history. The S&P 500 slumped 225 points (-7.6%) to 2,746, and the Nasdaq 100 shed 582 points (-6.8%) to 7,948. These major indexes are now very close to the first bear market (20% down from recent high) in over a decade. Shares in Energy (-20.08%), Banks (-14.24%) and Automobiles & Components (-11.24%) sectors suffered the biggest losses.

XAU/USD - Double Bottom Support

Gold hit a multiyear high of $1,703 an ounce in early Asian trading hours yesterday. It finally closed at $1,679, up from $1,673 on Friday. Most of the buying was triggered in the wake of increase coronavirus cases and Russia vs. Saudia price war.

Mainland China had 40 new verified evidence of viruses on Sunday, the National Health Commission announced, taking the country's total quantity of approved cases to 80,735.

China's exports declined distinctly in the first two months of the year while imports diminished, data presented on Saturday, as the health crisis triggered by the outbreak produced massive delays to business operations, global supply chains, and economic exercise. 

Besides, the Asian equities declined as traders retreated to bonds to hedge the economic trauma of the coronavirus, and oil fell more than 20% after Saudi Arabia cut its official selling price. Traders continued to seek safety in U.S. Treasury bonds, driving the 10-year Treasury yield to another record-low close at 0.501%.

XAU/USD - Daily Technical Levels

XAU/USD - Daily Trade Sentiment

Gold prices are trading with a bearish sentiment around 1,655 level as the yellow metal has broken the bullish channel, which supported the XAU/USD around 1,665.

Technically it should encourage sharp selling in gold, but the weekly pivot point level may help the precious metal around 1,647. Gold has recently crossed below 50 EMA level, and it's likely to extend selling until 1,647. In case it breaks below 1,647, the next support can be seen around 1,633.

USD/CAD - Drop in Oil Prices Drives Buying

The USD/CAD surged 1.7% to 1.3657 as oil prices collapsed. The dollar dipped versus the euro and yen as a drop in oil prices coupled with coronavirus concerns to push U.S. yields to once-unthinkable lows.

The Oil prices dropped 30% after Saudi Arabia astonished markets with a pledge to cut costs and expand production following the collapse of an OPEC supply agreement.

Panicked investors hurried to the safe haven bonds, leading 30-year U.S. yields below 1% and 10-year yields below 0.5%, all but reducing what was once the dollar's chief attraction.

Oil prices suffered their worst day since 1991 after Saudi Arabia initiated a price war over the weekend following a failure to reach an output-cut agreement with Russia. Brent once dived 31% to as low as $31.02 a barrel. It closed at $34.36 a barrel, down 24.1% on the day. U.S. Nymex crude oil futures settled 24.6% lower at $31.13 a barrel. Consequently, we have seen some dramatic sell-off in the Canadian dollar.

USD/CAD - Daily Technical Levels

USD/CAD - Daily Trade Sentiment

The USD/CAD is trading within a choppy session with an upper limit of 1.3770 - 1.3535. The USD/CAD has surged after violating the horizontal resistance level of 1.3539, mostly in the wake of reduced demand for the Canadian dollar over weakened oil prices.

On the higher side, the USD/CAD pair may head towards the next resistance level of 1.3770 as the 50 EMA is suggesting bullish bias in the pair. Whereas, the leading indicators such as RSI and MACD are suggesting odds of a bullish trend continuation in the USD/CAD. I will consider looking for buying positions over 1.3600 today.

AUD/USD – Double Bottom Pattern

The AUD/USD failed to stop its bearish trend and still to trade below the 0.6600 representing 0.55 declines despite the modest risk recovery in the market during the early Asian session.

At the time of writing, the AUD/USD currency pair is currently trading at 0.6550 and consolidates in the range between the 0.6544 - 0.6613. Whereas, the greenback recovery exerting bearish pressures on the pair.

U.S. President Donald Trump's suggested to 'major' economic measures in order to control coronavirus (COVID-19) triggered the risk-on. As in result, the U.S. 10-year and 30-year Treasury yields recovered from their record lows marked the previous day while also supporting the U.S. equity futures to register nearly 3.5% gains by the press time.

Moreover, the U.S. Vice President Mike Pence also favored the risk-on sentiment while saying that there are enough testing kits, whereas upbeat comments from Japanese Economy Minister Taro Aso also helped the trading sentiment. However, three more deaths by the virus in South Korea, as well as downbeat open of the Asian equities, weighed on the Aussie pair off-late.

AUD/USD - Technical Levels

AUD/USD - Daily Trade Sentiment

The AUD/USD are consolidating in a wide trading range of 0.6645 and 0.6545. The market is calm now following a storm triggered by the drop in crude oil prices. The RSI and Stochastics are holding in the selling zone, suggesting odds of bearish bias in the pair.

The 50 EMA is likely to extend resistance around 0.6600, and closing of series of selling candles below this level can drive further selling in the AUD/USD pair. The violation of 0.6545 level can trigger further selling until 0.6450 today. So, let's place a sell stop below 0.6540 to capture any quick market movement.

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