This market brief is an overview of the week ahead and some of the events we see as being important to the markets.
Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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AUSTRALASIAN SESSION
ASX – 4791
The ASX continued its move down last week and reached a low of 4720 which was only 1 point away from our downside target of 4719. The down move has been fast and aggressive and is now in a potential slowdown process.
If the down move is to continue then 4719 needs to be broken early this week, and if so, an ambitious target of 4417 could be reached.
If the bounce off 4719 proves to be a launching pad for a move back up, then we will look for 4903 and 4982 as key levels. If the rally breaks through these levels then we could see 5048 as resistance.
EUROPEAN SESSION
FTSE – 6401
The FTSE joined the rest of the world markets on the way down and reached our downside target of 6306 with a low of 6284. The slowdown process of this down move has already started.
If the down move is to continue the FTSE needs to break through 6306 and preferably early in the week. Otherwise the full effect of the slowdown will likely occur and a possible reversal could take place.
If 6306 provides support then we could see a move up towards 6544. For this to occur we need to see our short term level of 6421 broken.
DAX – 8239
Again the DAX moves have been tamer than the rest of the markets, but it was still able to get as low as 8034 which was 31 points from our downside target of 8003. Now that most of the other markets have reached our downside targets, this could be the start of a potential reversal.
If a down move is to continue the level 8003 needs to be broken early this week, and if so we could see 7753. If this level provides no support then 7583 could be the next target.
Otherwise, if the DAX was correct and the other markets overextended the down moves, then any attempt at an upmove needs to break past 8351 before another attempt is made at the highs near 8550 which were reached mid May
US SESSION
S&P – 1640
The S&P down move continued last week and reached our low of 1597 as mentioned in last weeks update, but then bounced off that level and closed 40 points higher.
For the down move to have any impact 1611 needs to break with long down bars followed by a solid break past 1585 which would lead the way to a possible but ambitious target of 1547.
If we are to see the bounce continue we need to see 1646-48 level broken with a solid up move which could lead the way for another attempt at new highs.
NASDAQ – 2985
The NASDAQ looks to be following the DAX lead at the moment, but not with the same veracity as its move was only 4.6% down from its highs.
If this is it for the NASDAQ down move then a solid break above 2995 could lead a move past its previous high of 3053, but we will make this clear that it needs to occur early in the move.
If the down move is to continue and the bounce was a false break then we would like to see 2890 broken before an attempt at 2784 is made.
FX MARKETS
AUD.USD – 9493
The AUD is out of favour and it shows in the aggressive down moves. Any attempt at a rally is met with solid selling with even more aggression than previously.
We are now near the Oct 2011 lows of 9387, and once this level is broken the next significant low was back in MAY 2010 which was near 8000.
If there is any bounce/rally left in the AUD then it needs to break above the two levels mentioned last week – 9620 and 9680.
EUR.USD – 13213
The EUR finally made its move breaking past 13054 with a solid long up bar.
If this up move is to continue then we would like to see 13285 broken with the same strength and then we could see 13433.
If a down move is to play out from here then 13176 needs to break before 13117 is reached. If this level is broken then 13084 is the next target.
GBP.USD – 15554
The GBP’s followed the move of the EURUSD on the way up with solid long up bars breaking through all targets mentioned last week, even the ambitious target of 15325.
If the up move is to take full effect, then 15597 needs to be broken early in the week and with solid continuous moves before an attempt at 15808 is made.
Otherwise a move back down could start if 15463 is broken, then we would look for 15378 and possibly 15325.
USD.JPY – 9751
The JPY continued its strength last week and reached a low 9499 which indicated a very aggressive move. But once this level was reached we saw a significant bounce back of approx 250 points.
If the down move is to continue then we would like to see 9726 broken before 9624 is reached.
If the bounce is strong then a break past 9863 could see 9936 followed by an ambitious 10142
COMMODITIES
GOLD – 1382
GOLD broke through 1398 again and reached a high of 1423 and then went straight back down. GOLD is range trading at the moment and it looks like 1372 and 1421 are playing as important levels.
Therefore, these are the two levels we will be watching and if they break we will look for 1460 followed by 1476 on the upside and 1356 followed by 1338 on the downside.
US LIGHT CRUDE OIL – 9618
LIGHT CRUDE made a move up last week and with some solid long bars breaking through 9346-68 area to close above 9600.
If this up move is to continue and 9744 is reached we would to see 9593 hold.
If we are to see a down move recur then if 9520 is broken then 9355 could be reached.
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