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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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We may take multiple trades throughout the week. Currently Trade View is Net Short.
AUSTRALASIA
ASX – 5459 ( + 22 or + 0.40% )
The ASX reached a low of 5373 which was only 6 points from the all important FICM level of 5367 as mentioned in previous weeks. We then saw a bounce and close above another area of importance 5414 – 47. Still no clear direction for the ASX, but will be watching closely for a sharp move either side. The ASX is still range bound therefore our comments remain the same with slight modifications..
For the up move to continue then we would like to see the area between 5415 – 47 remain as a strong level of support. Once this occurs then 5495 could be seen again. If the momentum continues strong when it breaks through 5495 then it could reach 5562 again before slowing down temporarily.
The downward process was stopped by strong support near 5367. If the Downward process is to continue then we would need to see a strong break and close below 5367. This could then accelerate the move down towards 5270 with a possible extension down to 5201. If the momentum is strong then we could see 5177 reached were the ASX might find some temporary support.
EUROPE
FTSE – 6764 ( – 56 or – 0.82% )
The FTSE moved lower early breaking through 6791 with a long down bar reaching a low of 6700. As mentioned previously downside moves has been short lived by this market as any fear has been removed from the markets by central bank continued intervention. What we are seeing is 2-3 down days followed by strong bounce back up.
For the up move to restart we would like to see strong early breaks back above 6791 and 6851 before another attempt is made at breaking past both 6878 and possibly 6904.
For a downward process to take full effect we would like to see a strong break back down past 6723 and 6693 before a final move down towards 6632 is made. It will be here that the FTSE will be tested. If the momentum is strong then we could see further breaks down, but if the continued Intervention is ripe then support could be found anywhere.
DAX – 9842 ( – 148 or – 1.48% )
The DAX moved lower last week after failing to hold the new all time high from the previous week. There seems to be a lot of downside pressure thrown at these indices but they still hold up. As mentioned last week “With continuous new all time highs being reached and then failing to hold, it is important to understand this behaviour before taking part in that direction.”
For the upmove to restart we would like to first see another break back above 9899 before pushing higher and attempt to break past the area between 10021 – 75. Any strong break past this area could extend to an ambitious level of 10258.
If the downward momentum continues this week we would like to see an early strong break and close past 9750. Once this is achieved then further downside moves could continue if 9667 followed by 9580 which could provide the first level of support.
US
S&P – 1959 ( – 3 or – 0.15% )
Another all time high for the S&P last week (wait didn’t we say that last week and the week before etc, etc etc……) of 1968. We are now either in a very well structured BULL market (where – 2.9% GDP is a good thing) or a very Badly structured correction waiting to happen. Either way as long as the FED is involved in these markets and price discovery is manipulated then caution will need to be observed in both directions.
If the S&P stays on this course then the next projected level is 1993 – 2002. We will however be discussing the moves in our LIVE CHAT ROOM.
For the down move to restart then we would like to see a solid break back down past 1947 reaching 1926. Once this level is broken then we could see 1911 again.
FOREX
AUD.USD – 9423 ( + 38 or + 0.40% )
9423 it is. “It is still range bound and the 2 FICM levels we are looking for before a significant move occurs are 9203 and 9423. Until these 2 key levels are broken our comments from last week remain the same.”
For the move higher to continue we would need to see an early break and close past 9423 and 9460 before the potential to reach 9539 could occur. Once this is reached the AUD could start a new phase and potentially new up trend.
If the USD finds strength and 9423 proves to be difficult to stay above, then a move past 9333 could reach 9287. If the downward momentum is strong then we would like to see a strong break and close past 9287 reaching 9203 were the AUD might find temporary support.
EUR.USD – 13648 ( + 49 or + 0.36% )
Another move higher for the EUR, not by much but just enough to keep it going.
Lets put it into perspective for a second:
Negative or Low Interest rates should mean that larger firms should use Cash to build the business and grow, employ people and produce more goods. Thus fuelling spending and Economic growth.
BUT
Just like in the US, they did not do this, they reduced staff, used Low Interest rates to borrow money and produce record BUYBACKs of their company stock. Basically the opposite of why Interest rates are made low in the first place. Lets see if the large European companies follow their US counterparts?
If its economic growth the Central Banks were looking for then maybe they should have put a caveat on the low Interest rate environment?
- NO Buybacks
- Use money to grow, grow, grow
- Employee staff, NOT reduce staff……
If the EUR was to strengthen then we would like to see 13669 broken early followed by a further break past 13713. Once this level is also broken we could see the EUR back near 13749- 79.
For the EUR to restart a move down we would like to see an early break past 13595 reaching 13564. Once this occurs we could see the area between 13482 – 72 reached. If the momentum is strong then we could see 13392.
GBP.USD – 17033 ( + 20 or + 0.12% )
The GBP fell away early but then found some support to close slightly higher. It is Interesting how some markets don’t like more than 2 down days? Last weeks move was very mild therefore our comments remain the same.
For the GBP to move higher we would like to see solid support near 16996 followed by a break and close past the range high of 17105 before further moves towards 17283 occur.
For the GBP to move lower then we would like to see a solid long down bar break and close below 16996. Once this occurs further downside moves past 16908 could reach 16854. If the downward momentum is strong then 16767 and 16731 could be reached.
USD.JPY – 10143 ( – 63 or – 0.62% )
And now we have the break below 10152. The current move is forming the start of a downward process, but this will be confirmed once 10052 is also broken. The Big question is as the USD.JPY has been tied to the S&P 500 for a while now, could this be an early warning sign of the future direction of the S&P500 or will the FED step in here too?
For the USD to move higher we would like to see an early break past 10170 before reaching 10247. Once this occurs further breaks are possible if 10309 is broken with strong upward momentum reaching 10356. This level will then need to be broken with a long solid up bar before we see 10410.
If we see another downward move then we would like to see an early break past 10119 reaching the area between 10078 – 52. If 10052 is then broken with a long solid down bar we could see 9992 – 77.
COMMODITIES
GOLD – 1316 ( + 2 or + 0.15% )
Someone put the kibosh on GOLD?? “If we see a shift from complacency in this market turning to panic GOLD might find strength as a safe haven once more.” has the shift started? “WILL THE FED THEN TAKE ACTION TO SUPPRESS THE VOLATILITY IN GOLD TO AVOID PANIC”
For the upward move to continue higher we would like to see an early break and close past 1326 – 1330 area. This could then lead GOLD to reach the area between 1351 – 59. Once this area is broken the 1367 – 77 will play an important role in defining the next move.
If the down move restarts then we would like to see an early break past 1296 reaching 1285. Once this level is also broken we could see GOLD testing 1274 once again.
US LIGHT CRUDE OIL – 105.72 ( – 93 or – 0.87% )
Another breather for OIL, moving lower by about $1. “The one thing to note that moves like this are event driven, so when the event circumstances cool, then the move reverts back to previous levels. Caution should be taken if you decide to chase explosive moves.”
For the upmove to restart we would like to see an early break back above 106.26 followed by a strong push past 107.71 with strong upward momentum reaching 108.92. If this level is broken and the conflict continues to escalate then the previous highs of 112.20 set back in AUG2013 could be tested.
If the move lower continues then we would like to see a strong break past 104.96 which could then see OIL back down near 104.02 – 103.49 area where it might find some temporary support, but if the sell off is strong then we could see OIL breaking past 102.29 reaching 101.28.
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