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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 5167 ( -88 or -1.67% )
Last week we broke out of the sideways consolidation and we will now be looking to see if the ASX can hold Thursday’s low.
VOLATILITY ALERT: Monetary Policy Minutes on Monday.
For a continued move to the upside we would like to see this market hold above 5161. If we can hold above this level we will look for a move back up to 5238. A strong break and close above this level could see the ASX trade back up to 5294. If momentum remains strong, we will look for a move to 5373.
If we fail to hold above 5161, we will look for a move back down to 5090. A break below this could result in a move back down to 4997, and further breaks to the downside could see the ASX head to 4890 if this market continues to sell off.
EUROPE
DAX – 9690 ( -109 or -1.11% )
After selling off early in the week, the DAX consolidated its losses to finish down 100 points for the week. We expect high volatility this week with the BREXIT referendum so we could see some very big moves.
VOLATILITY ALERT: German Constitutional Court Ruling and ZEW Economic Sentiment on Monday, PMI data on Wednesday, BREXIT on Thursday, IFO Business Climate on Friday.
We will be discussing this market this week in the LIVE CHAT ROOM.
For a continued move to the upside we would like to see this market hold above 9620. A break above this level could see the DAX retest 9822. Should we break 9822, we will be watching further upside moves into 10013 and 10158. If we continue to rally, a strong move into 10337 cannot be ruled out.
On the downside, we will be watching 9514 closely. A break and close below this level could likely result in a retest of 9447, and should we break below this level we will then look for a move down into 9386 and possibly 9322. If the moves to downside remain very strong, we could see a very sharp move into 9128.
US
SP500 – 2067 ( -30 or -1.43% )
The S&P has struggled to break through the key 2079 level however did put in an important reversal bar on Thursday. We will be discussing this market in more depth in the MEMBER PORTAL.
VOLATILITY ALERT: Yellen testifies on Tuesday and Wednesday, Core Durable Goods Orders on Friday.
For a move higher we would like to see a the S&P hold above 2054. Should this occur we will look for a move to test 2076-2079 before a pause. A strong break above 2079 could see a very fast move to retest 2097, and if momentum remains strong we will look for an additional push into 2106 and 2112 again.
If we cannot close above 2079, we may see a move back down to 2054. A break below 2054 may result in a move back down to 2040; and should momentum to the downside continue we will look for a move back down to 2019. If there is a larger sell-off this week, 2002 cannot be ruled out.
FOREX
AUD/USD – 0.7392 ( +21 or +0.28% )
The AUD again only slightly finished higher for the week so our levels remain unchanged.
VOLATILITY ALERT: Monetary Policy Minutes on Monday.
For a move higher we would like to see the AUD hold above 0.7364, followed by a break and close above 0.7447. A strong break and close above this level could then see a quick move to 0.7489 before a pause; and if momentum remains strong we will look for a move into 0.7561.
If we cannot hold above 0.7364, we will look for a move back down to 0.7282. A strong break below this level may result in a move back down into 0.7229 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7169.
EUR/USD – 1.1232 ( -22 or -0.2% )
Like the AUD, the EURO remained in a sideways range for most of the week. This week we expect fireworks as a result of BREXIT and will be keeping a close eye on this market.
VOLATILITY ALERT: ZEW Economic Sentiment on Monday, PMI data on Wednesday, BREXIT on Thursday, IFO Business Climate on Friday.
For a sustained move higher we would like to see this market hold above 1.1249, followed by a quick move to test 1.1347. A strong break and close above these levels could see the EURO head to 1.1385. Should we break this level we could see a quick move to 1.1435 and 1.1496 before a pause. If momentum remains very strong and we break and close above 1.1496, we could see a final push to test 1.1613.
On the downside, should we break below 1.1249 we may see a move back down to 1.1201. Should the EURO continue to taper off, a break below this level may result in quick moves down to 1.1163 and 1.1117 before a pause. If 1.1117 is broken, we will look for the EURO to move back down to 1.1033 and 1.0977.
GBP/USD – 1.4351 ( +102 or +0.72% )
The tragic shooting of a British MP saw the GBP rally into the close of last week.
It goes without saying- this is the most important week of the year for Cable. If you do not have a plan for BREXIT then we strongly urge you to think about what your exposure is going into Brexit, and whether it is an event you wish to participate in. Markets are likely to be extremely volatile this week!
We will be covering this market exclusively in our MEMBER PORTAL and LIVE CHAT ROOM all week, including LIVE TV coverage where our traders will be sharing our screens with you real-time.
VOLATILITY ALERT: BREXIT on Thursday.
For a move to the upside we would like to see this market hold above 1.4382 and 1.4469. A strong close above these levels could see the GBP head quickly to 1.4538, and finally 1.4630 before a pause. If momentum remains very strong we will look for moves into 1.4790, 1.4896 and 1.4984.
If we cannot hold above 1.4223, we will look for a move back down to 1.4194. A break below this level could see a quick leg down into 1.4041 and 1.4006. Further breaks to the downside could see Cable head to 1.3937, and should we see continued breaks lower we will look for another leg down to 1.3853. If momentum to the downside remains very strong, a sell-off into 1.3743 – 1.3725 cannot be ruled out.
USD/JPY – 104.11 ( -281 or -2.63% )
The USD/JPY was sold off very heavily last week with no additional easing from the BoJ announced. We discussed this at length in a Live TV video on Thursday and will again be discussing this market, and other YEN pairs in our LIVE CHAT ROOM this week.
VOLATILITY ALERT: BREXIT on Thursday.
For a continued move to the upside we would like to see this market hold above 103.99, followed by a break and close above 104.97. Should this occur we will look for a move to 105.79 and 106.30. A strong break above 106.30 could see a move to 107.75, and if momentum remains strong we could see a quick move back up to 108.31.
If however the USD/JPY cannot hold above 103.99, we will look for a move down to 103.21. A break below this level could see the USD/JPY trade quickly down to 102.29 before a potential pause. Should we continue to trade lower and see continued downside pressure on the USD/JPY- a sharp move to 101.22 is possible.
COMMODITIES
GOLD – 1298 ( +25 or +1.96% )
Last week GOLD continued its rally amidst global uncertainty however Thursday’s reversal bar may prove pivotal in the week ahead. Could we see a flight to safety as traders look to GOLD as a safe haven this week?
For a continued move higher we would like to see a close above 1294, followed by a break and close through 1303. Should this occur we could see a move to retest 1315, and a break of this level could see a strong move into 1322.
If Gold cannot hold above 1294, we will look for a move back down to 1276. A strong break and close below this level we could see Gold trade back down to 1257, and if momentum to the downside remains strong we will watch for another move down to 1247 before the end of the week.
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