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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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Trade View has entered the weekend Net Short.
AUSTRALASIA
ASX – 5520 ( – 51 or – 0.92% )
The ASX rallied early last week and tried very hard to maintain the upward direction, but the rest of the world markets would not have it. So we saw a sharp decline towards the end of the week. The Bearish Divergence also played its role in slowing the ASX’s upward move.
For the up move to restart its upward move we would like to see a strong break and close back past 5562 before a further push towards 5732 is made.
If last week downside move continues then we would like to see an initial break past 5491 before a long down bar breaking and closing past 5447 and 5415. Once this occurs then an old level 5367 will be watched very closely as it was a solid level of support before the push higher.
EUROPE
FTSE – 6666 ( – 132 or – 1.94% )
The FTSE has struggled over the past few months and when the rest of the world markets fell over so did the FTSE. There is not much to discuss here just that a struggling market will continue to struggle until a big shift is made to make it move higher.
For the up move to restart we would like to see 6696 broken early in the week before reaching 6738. If the upward momentum stays strong and the rest of the world equities bounce back then the FTSE could try to break through 6792 before an attempt is made at breaking through another FICM level of resistance 6857.
If the FTSE cannot hold on any longer then the downside breaks could come quickly. The first FICM level is 6632 which acted as support on Friday. If this is broken early in the week we could see 6595 breached before reaching the area between 6550 – 23. If the downside momentum is strong then 6459 could determine the FTSE’s next trend direction.
DAX – 9177 ( – 471 or – 4.88% )
Last week we said:
“In the past we have seen the DAX stretch itself in one direction before the rest of the markets follow, other times it realises they are not following and then it retraces quickly back to previous levels. We are now seeing some decent downward swings in the DAX prices while the rest of the world are reaching new highs and then coming back down. What we are now looking for is a strong move either way from the DAX before sentiment is known.”
For the upmove to restart the DAX would need to have overstretched itself. We would like to see and early break and close back past 9201 with a long up bar before reaching 9321. Another strong break needs to occur past 9401 before we could see it reach 9579.
If the market is in a FREE FALL mode then 9201 needs to become a solid level of resistance before further moves down towards 8959 occur. Once this level is reached and if the rest of the world markets are panicking the DAX might take advantage and attempt to reach an ambitious downside target of 8520.
Members can log in and go to the DAX Forum to see our views on a possible formation on DAX projected for the rest of the year.
US
S&P – 1923 ( – 54 or – 2.73% )
Ooops!
For the up move to restart the S&P will now need to make a solid statement to the markets by breaking back above 1938, 1947 – 50 before testing 1964 again, otherwise.
The downward process started last week with some force. If it is to continue then we would like to see the same momentum breakthrough 1909 early in the week before testing 1882. If it continues strong then 1869 could be reached.
FOREX
AUD.USD – 9315 ( – 81 or – 0.86% )
“This pair is 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 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 – 13429 ( – 1 or – 0.01% )
The EUR made another move lower last week but was stopped by one of the FICM area’s mentioned last week (13391 – 75 ) before a move back up on Friday to close only 1 point lower for the week. It looks like the Bullish Divergence mentioned previously might take effect this week.
As the EUR only closed 1 point lower, our comments remain the same as last week.
For an upmove to start we would like to see the Bullish Divergence formation completed and play its role and as support near 13391 – 75. Once this is achieved we could see a move higher breaking past 13472 – 81 reaching 13513. If the upward momentum remains strong then we could see further breaks past 13554 and 13589 reaching 13620.
For the EUR to continue it’s move down then we would like to see a strong momentum break with a long down bar through 13391 – 75 reaching 13342. If the downward momentum takes hold and we see a free fall, the levels we will be monitoring are 13342, 13246 and finally 13104.
GBP.USD – 16826 ( – 149 or – 0.88% )
The GBP fell way out of love last week as the USD strengthened and made ground against all currencies. The current down move has completed its FICM process and we also see possible Bullish Divergence forming.
For the GBP to move higher we would like to see an early break back up above 16860 with a a long up bar reaching 16936. Once this level is reached the Bullish Divergence needs to form before another move higher reaches 17085 and possibly 17143 before it sees resistance again.
For the GBP to move lower we would like to see a complete breakdown in the markets in general. If the USD strengthens again we could see 16774 broken early in the week reaching 16731. This level could be quickly broken allowing the GBP to fall to 16537.
USD.JPY – 10257 ( + 73 or + 0.72% )
The USD strength help push the USDJPY past the highs of the Standard Deviation levels or the range. The pair reached a high of 10308 which was only 1 point below our previously mentioned FICM level of 10309. But as per normal when the deviation is too great we saw the pair fall back in and close just below the upper channel.
This week saw a complete disconnect between this pair and the S&P 500.
For the USD to move higher we would like to see a strong break above 10270 pushing towards 10309. It is important for the pair to break past 10309 this week before 10356 is reached.
This level will then need to be broken with a long solid up bar before we see 10410.
If the down move restarts we would like to see 10214 broken early in the week followed by a strong break past 10152 – 69 area reaching 10052. If 10052 is then broken with a long solid down bar we could see 9982 – 77.
COMMODITIES
GOLD – 1293 ( – 14 or – 1.07% )
Last week saw equity markets move lower (tumble), VIX Spike, and GOLD go down? The reason for this is that the USD strengthened due to possible earlier than expected interest rates rise in the US.
For the upward move to restart we would like to see a solid break and close above 1295 – 97 before reaching 1312. If the upward momentum is strong then 1330 could be tested next. As this market is event driven breaks past 1330 could be very strong.
If the US strenght continues then a continued down move could see 1285 broken early in the week followed by a strong momentum break past 1274 before reaching 1264. Once this level is also broken we could see 1252.
US LIGHT CRUDE OIL – 9760 ( – 434 or – 4.26% )
OIL made an aggressive move lower last week failing to hold any support levels until it reached a low of 907 which was only 14 points lower than our target in last weeks brief.
For the upmove to restart we would like to see 9721 become a strong level of support before a move higher past 9821 occurs. Once this level is reached and broken we could see OIL reach 99.42 and possibly break back into the $100 a barrel reaching 100.16.
If the move lower takes another leg down then we would like to see a solid break past 9721 – 9699 area before reaching 9646. Another long down bar break past 9646 could lead OIL on a bit of a FREE FALL past 9445 on its way to 9365.
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