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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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AUSTRALASIA
ASX – 5426
The ASX had a late rally into the week staying within the Standard Deviation Channel, and closed on its range high as mentioned last week.
For the up trend to continue, we would like to see a solid move up towards 5481. If 5481 is broken with long solid up bars then 5549 could complete a new range. This would then put the ASX above the Standard deviation channel, and therefore a revision of upper level targets will need to be made.
For a down move to restart, we would like to see a solid break back down towards 5325 with long down bars and solid momentum. Once this occurs then 5261 will be our next target. If this level is broken with solid down bars then we could see support forming near the 5229 – 01 area.
EUROPE
FTSE – 6725
The FTSE has now gained some upward momentum and is looking very strong. Even though our proprietary system FICM is indicating a potential slowdown in the current move.
For the upmove to continue, we would like to see 6739 broken early in the week with solid long up bars leading the FTSE towards 6792. Once this occurs then we would like to see another solid break past 6792 before 6875 is reached.
If the FTSE cannot break past 6739 and the slowdown process take full effect then a move back down could see 6657. Once this level is broken with long solid down bars then 6616 could be reached. If the momentum is strong then we could see the 6563 – 31 area also reached.
DAX – 8979
Again the DAX has moved higher, but it lacks the same enthusiasm that the rest of the markets are displaying. Any early signs of a down move from the DAX will be monitored closely.
Given that we are at all time highs for the DAX, if it is to continue higher we would like to see 9010 broken early in the week with long up bars and strong momentum. If this occurs then the 9167 – 90 area could be reached, which would complete the next range set. If these levels are broken convincingly then we will revise the move.
If the DAX’s strength runs out of steam and a down move occurs, then we would like to see 8887 broken early in the week followed by a sharp move towards 8746. If 8746 is then broken the next level down we see is 8674 followed by 8534.
US
S&P – 1759
The S&P is now moving forward but with less momentum than anticipated. We mentioned last week that the markets need to do some price discovery, and this appears to be exactly what is going on. Some markets are rallying in anticipation of further rallies by the S&P, while other markets are more tame and working out what to do next.
If the up move is to continue higher we would like to see 1752 become a solid level of support before a move towards 1776 takes place. Once this is reached then we would like to see some solid upward momentum before reaching 1797 and possibly touching 1800.
If the enthusiasm turns into negative sentiment then a break back down past 1752 could see 1726 being reached. If this level is broken with long solid down bars then the area between 1712 – 07 will be tested. A further downward break could occur if the S&P falls below 1696.
NASDAQ – 3382
The NASDAQ also rallied last week but without the same enthusiasm that some of the other markets displayed. We have seen many instances where the NASDAQ will lead a rally, but if the momentum isn’t there, it falls back quickly and ruthlessly. The NASDAQ will be watched closely over the coming weeks.
If an upmove is to continue and the range is met, then we would like to see a move towards 3422 early in the week, and if this is broken then 3443 could be seen.
If the NASDAQ slows down and a the rest of the markets move lower as well, then we would like to see 3351 broken early in the week followed by 3312 being tested. A solid break past this level could see the NASDAQ come back back down near 3256 – 51.
FOREX
AUD.USD – 9576
The AUD tried to push higher early last week, but it was met with a strong level of resistance at the top of the Standard Deviation Channel.
For the new uptrend to restart we would like to see a solid break back above 9626 and then 9702 before we see a push higher. Once these levels are broken and 9702 becomes support, then we could see 9793 reached. If 9793 if broken with long up bars then an ambitious level of 9973 might be reached.
If last week’s move down was another attempt at a down move, then for it to continue we would like to see an early break through 9519 followed by solid break past 9464. If the downward momentum continues with strength then 9370 and 9309 will be watched closely.
EUR.USD – 13797
The EUR continued last week in the same manner as the previous week with a strong upmove and another 150+ point week.
If the EUR continues this week in the same manner as the previous two weeks, then we could see 14000 sooner than first thought. For this to occur we would like to see 13848 broken with solid upward momentum followed by an even stronger break past 13933, before seeing a push through 14000 and eventually settling near 14022.
The USD has not been able to find much strength lately, but if the USD does find it against the EUR this week, then 13710 would be the first level it needs to break before moving down towards 13621. If 13621 is broken with long solid down bars then 13506 and 13432 could come quickly.
GBP.USD – 16160
The GBP tried to push higher last week but was unable to as it ranged approx 130 points and finished 10 points lower. As with the EUR, if the US finds some strength then be prepared for a possible sharp reversal.
As per last week, for the up move to continue, we would like to see a strong move towards 16225. Once this level is reached, then for the next leg to take full effect we would like to see 16260 broken with long up bars and strong momentum. This could then lead to an ambitious extension of 16422.
For another leg down to start, we would like to see an early break back below the 16073-33 area. If the downward move has strong momentum and the levels mentioned are reached quickly then 15910, 15841 and 15722 will be the next levels monitored.
USD.JPY – 97.40
It is getting harder for the USD to play its role when the JPY is yet again pushing against convention and looking to strengthen. This will put further pressure on the USD which is considered to be the only real safe haven left. Is the shift towards alternative currency already starting?
For the new up leg to restart we would like to see strong long up bars break through 97.55 and 98.08. Once this occurs then the 98.64 – 81 area will be the difference between a rally and a complete stop for the upmove. But if this area is broken convincingly, then 99.99 and 100.52 could be the next targets reached.
If the USD continues to go out of favor then the medium term downtrend could continue if we see 96.73 broken early in the week. Once this is broken a move past 96.20 could lead the way to 95.40, and if the break past this level is strong with long down bars then 94.64 could be possible.
COMMODITIES
GOLD – 1349
Another rally in GOLD last week would make it 100 points moved in two weeks. It’s important to watch GOLD closely as it has a tendency to move quickly, and all of a sudden it could be 1900 before you even knew what happened.
For GOLD to take another leg up we would like to see 1353 broken early this week followed by a move towards 1380. Once 1380 is reached we would like to see a solid break with long up bars past 1393, this will pave the way for GOLD towards the 1415 level.
If 1353 is difficult to break then a move back down could restart if we see a break past 1325. Once 1325 is broken then 1312 could be seen next. If the downward momentum is strong then a break past 1312 could see 1299 and possibly 1282 were some support might be found.
US LIGHT CRUDE OIL – 97.84
When trading the markets you will notice one repetitive behavior, and that is that some instruments will be in favour and others will fall out of favour. This is definitely the case with OIL. Strangely we are running out of this natural resource as we consume more of it but the price of this valuable commodity is going down. Go figure.
If OIL comes back in favor and the up move restarts then we would like to see an early break past 98.60, followed by a strong break with long up bars through 99.47. Once this occurs we could see 100.15. If the move is to be sustained then 100.15 needs to hold as a solid level of support.
If the down move continues from here then a solid break past 97.44 could see 95.91 very quickly. If the downward momentum is strong then 9456 could be tested next and if it fails and then 9345 could be next.
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