Top Trade Setups in Forex – Trades Awaits NFP Tomorrow!

The U.S. stocks continued their rally, boosted by upbeat economic data and seemingly-abating worries about China's coronavirus outbreak. Both the S&P 500 (+37 points or 1.1% to 3334) and the Nasdaq 100 (+33 points or 0.4% to 9367) made fresh record closes, and the Dow Jones Industrial Average surged 483 points (+1.7%) to 29290.

Research firm Markit will publish January German Construction PMI. The German Federal Statistical Office will report December factory orders (+0.7% on month expected). The U.S. Labor Department will post initial jobless claims in the week ended February 01 (215,000 expected). 

XAU/USD - 50 EMA Resistance Pushes Gold Lower 

The precious metal gold soared higher as traders assessed the economic consequence of the coronavirus revolution as the death losses jumped through 500, but the profits in bullion were capped by China's settlement to halve taxes on U.S. imports.

The death losses from the disease in mainland China soared to 563, as authorities stepped up attempts to combat a virus that has shut down Chinese towns and drove thousands more into quarantine encompassing the globe.

The latest headline came that the total confirmed cases of the coronavirus infected people from Hubei, the epicenter of the epidemic, has grown to 19,665 on February 05.

It was also stated that the cumulative death losses grew to 549 with the latest addition of 70 people. China's total of confirmed coronavirus cases increased to 28,018, with the number of people died due to the contagion rising to 563. On the positive side, the Chinese researchers have produced a medicine that will use in treating the coronavirus.

XAU/USD - Daily Technical Levels

XAU/USD - Daily Trade Sentiment

Gold dropped dramatically to examine the support mark of 1,550, and presently it's possible to test the 50% retracement level at 1,566, which may prolong solid resistance to gold today. On the upper side, the resistance is likely to be 1,566, and below this level, the chances of bearish reversal can be seen until 1,555 level today. 

USD/CAD - Bullish Channel Continues to Play

The USD/CAD edged up 0.1% to 1.3284. Government data showed that Canada recorded a trade deficit of 370 million Canadian dollars (610 million Canadian dollars deficit estimated).

At the coronavirus front, the latest headline came that the total confirmed cases of the coronavirus infected people from Hubei, the epicenter of the epidemic, has risen to 19,665 by the end of February 05. It was also mentioned that the total death losses rose to 549 with the latest addition of 70 people. China's total of confirmed coronavirus cases increased to 28,018 with the number of people died due to the contagion rising to 563.  

On the positive side, the Chinese researchers have produced a medicine that will use in treating the coronavirus.

Oil prices had difficulty in posting a rebound despite reports that the Organization of the Petroleum Exporting Countries (OPEC) and its allies may call for deeper production cuts amid the expectation of lower demand caused by the coronavirus outbreak. Nymex crude oil futures dropped 1.0% to $49.61, and Brent was down 0.9% to $53.96.

USD/CAD - Daily Technical Levels

USD/CAD - Daily Trade Sentiment

The USD/CAD is trading bullish at 1.3285, holding an immediate resistance nearby 1.3300. The USD/CAD is still retaining the bullish channel that is extending support around 1.3260, alongside the resistance around 1.3345.

The USD/CAD is trading below a strong resistance level of 1.3305, which marks the double top pattern has the potential to drive slight retracement until 1.3260, and in case 1.3260 gets violated, we may see further selling until 1.3245. Whereas, the bullish breakout of 1.3304 can drive more buying until 1.3330.

AUD/USD – Triangle Pattern Breakout

The AUD/USD currency pair continues to trade in the bullish territory despite the weaker-than-expected Aussie data release. The currency pair could put further bids if other investment banks also push back rate cut proposals. The AUD/USD currency pair is currently trading at 0.6759, representing 0.14% gains on the day, and the pair consolidates in the range between the 0.675 - 0.6765.

At the data front, Australia's Trade Balance dipped to A$ 5,223 million, driven by a 2% rise in imports and a 1% rise in exports. Markets had penciled in a trade surplus of A$ 5,950 million after December's A$ 5,800 million figure. 

Whereas, consumption, as represented by Retail Sales, declined 0.5% in December, compared to an estimated drop of 0.2% after November's 0.9% rise. It is worth to mention that the reduction in the spending and the decline in the trade surplus did not succeed to push the pair lower, such as the currency pair still trading in the green territory above 0.6750.

However, the reason behind the Australian Dollar strength could be the growing discussions that the Reserve Bank of Australias needs further time and definite proof to be assured that the on-going coronavirus is creating a deeper economic slowdown. The RBA may keep the rate unchanged for an extended period.

Meanwhile, several investment banks are still expecting for the rate cut by the Reserve Bank of Australia in the 2nd-quarter, while the Goldman Sachs thinks that the central bank will likely keep the rate unchanged until any noticeable declines have not come in the labor market.

AUD/USD - Technical Levels 

AUD/USD - Daily Trade Sentiment

The AUD/USD is trading sideways below a strong double top resistance level of 0.6775. The AUD/USD is facing support around 0.6685, which is the same level from where AUD/USD bounced off yesterday. 

The AUD/USD has also formed a downward channel, which is extending resistance at 0.6785 along with support at 0.6645. Today, I will be looking for a bearish trade below 0.6770 as the RSI and Stochastics are heading below 50, into the selling zone. 

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