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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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INDICES
AUSTRALASIA
ASX – 4919 ( -133 or -2.63% )
Markets go up, markets go down. We saw some strong moves to the downside in the ASX last week and the question remains- do we go higher or lower from here?
Last week we covered the ASX in our LIVE CHAT ROOM informing members of bigger moves down.
NOTE: This week it is Chinese New Year. Chinese stock markets will be closed all week so impact from China is likely to be negligible.
VOLATILITY ALERT: Stevens speaking on Friday (pre-market).
For a continued move higher we would like to see a strong break and close of 4997. Should this occur we could see a strong move into 5090 before a pause. If momentum is strong we could see further upside into 5126 an 5161.
If we fail to break above 4997, we are likely to retest 4890. A break below may result in a move down to 4820, and further breaks lower could see the ASX test 4782 and 4747 before a pause. A break and close below 4747 could see the ASX move lower into 4712.
EUROPE
DAX – 9258 ( -562 or -5.72% )
Last week we saw another strong move down on the DAX and we are now testing some very crucial levels. Very little data this week so markets will be sentiment driven.
For a sustained move to the upside we would like to see 9248 hold as support and see a strong close back above 9386. If momentum to the upside remains strong we could see a fast move up to 9620 and 9733 before a break.
On the downside we are watching for a break and close below 9248. A strong break and close below this level could extend the DAX down to 9092. Further breaks below this level could see the DAX head to 9016. If momentum remains strong we could see a very quick move to 8890 before a pause.
US
SP500 – 1880 ( -57 or -2.94% )
Like other indices the S&P retraced all of its gains made from the week prior and closed near the lows of the week at our important 1879 level. We alerted everyone to last week’s Job numbers and this was the key event for the week.
VOLATILITY ALERT: Yellen testifying on Wednesday and Thursday.
For a sustained move higher we would first like to see a strong break and close above 1902, followed by another strong break above 1915. Should this occur we will be looking for a move 1958 before a pause. A break of 1958 would like result in a move into 1969, and a strong break of 1969 could see a fast move to 1990.
Should the S&P fail to break above 1902, we will be looking for a retest of 1875. A strong break and close below 1875 may see the S&P move down into 1853 before a pause. If momentum remains strong to the downside, moves into 1834 and 1821-1817 are probable. A further break and close below 1821 could get things moving quickly into 1809 and 1772.
FOREX
AUD/USD – 0.7065 ( -18 or -0.25% )
After a strong move higher last week we saw the AUD reverse sharply off our 0.7229 – 0.7236 level mentioned last week, to finish basically flat for the week. Our comments remain unchanged
VOLATILITY ALERT: Stevens speaking on Friday (pre-market).
For a move higher we would first like to see the AUD hold 0.7014, followed by a strong break back above 0.7113. A break above could see us test 0.7197, and if the move up remains strong we will look for 0.7229 – 0.7236 before a pause.
If the AUD breaks back below 0.7014, we may likely see a move back down into 0.6997. A strong break below 0.6997 could see us move back down into 0.6958 and 0.6934. Should the move to the downside remain very strong we will look for a retest of 0.6830.
EUR/USD – 1.1157 ( +328 or +3.03% )
Our comments from last week:
“We will eventually break out of this tight range and when we do the move could be explosive so BE PREPARED.”
For a sustained move higher we would now like to see 1.1117 hold as support and a strong break and close above 1.1248. A strong break and close above this level would see a move into 1.1313. If momentum to the upside remains strong we could see a fast move into 1.1453.
If 1.1117 fails to hold we will look for a move back down to 1.1033. A break of 1.1033 may likely see the EURO trade down to 1.0977 before a pause. Should the downside move persist we could see the EURO trade all the way down to 1.0897 before a pause.
GBP/USD – 1.4243 ( +256 or +1.8% )
Our members were alerted to this recent bottom in the GBP weeks ago. We also posted some great trades over the last week in our MEMBER PORTAL.
For a move to the upside we would like to see 1.4469 hold as support, followed by a break of 1.4635. A break of 1.4635 could see a move higher into 1.4790, and should momentum remain strong to the upside we may see the GBP rally to 1.4877 – 1.4896 before a pause.
On the downside a strong break and close below 1.4469 could see a move back down to 1.4382. A break below this level would see a move into 1.4223 and 1.4194 before a pause. Should we see continued strength to the downside we could see a very sharp move into 1.4039
USD/JPY – 116.82 ( -430 or -3.55% )
How quickly markets change! The “surprise” BoJ negative rates announcement has now been completely faded as the USD/JPY sold off heavily last week. Given the market has faded this move we will begin to see the real impact of the BoJ’s monetary policy.
For this move to the upside to continue, we would like to see 116.08 hold followed by a strong break and close above 117.48. Should this occur we will look for a move higher into 118.24 before a pause. A break of 118.24 could see quick moves into 118.48 and 118.84, and if momentum remains strong a move into 119.20 is probable.
If the USD/JPY breaks below 116.08 we could see a sharp and fast move down into 115.53. A strong break and close below 115.53 may see a move into 114.57 and finally 114.08 before a pause.
COMMODITIES
GOLD – 1118 ( +55 or +4.92% )
GOLD has taken off as the safe haven play mentioned last week, rallying all the way to our 1170 level.
For a continued move to the upside we would first like to see GOLD hold above 1160, followed by a break and close above 1181. A strong break and close above 1181 could see a move into 1187 and if momentum is very strong we see a very fast move into 1206.
On the downside, a break below 1160 would likely result in a move back down to 1146. A strong break and close below this level would result in a move to 1139 and if momentum is very strong the next level we are watching is 1126.
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