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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 5510 ( +84 or +1.55% )
The ASX is now at a very key level and we will be watching this market closely in the event of a potential reversal this week.
VOLATILITY ALERT: Quarterly CPI on Wednesday.
For a continued move to the upside we would like to see this market hold above 5437. Should this occur, we will look for a move back up to 5535 before a pause, however if momentum remains very strong we could see the ASX continue to rally to 5589 and 5651 by the end of the week.
If we fail to hold above 5437, we will look for a move back down to 5373. A break below this could result in a move back into 5294 and 5248-5238, whilst further breaks to the downside could see the ASX head to 5161. Should we see a complete reversal to the downside, we will watch for a move back down to 5090.
EUROPE
DAX – 10149 ( +99 or +0.99% )
The DAX has broken above 10,000 but unlike other markets the DAX has yet to reach pre-BREXIT levels.
We will be discussing this market in the LIVE CHAT ROOM this week.
VOLATILITY ALERT: German Ifo Business Climate on Monday, Unemployment Numbers on Thursday, Retail Sales on Friday.
For a continued move to the upside we would like to see this market hold above 10158. Should this occur, we will be watching for a big push higher into 10337 and 10382. A break above 10382 could see the DAX make a move to retest 10460.
On the downside, a strong break and close below 10013 could see a move back down to 9822. A break and close below this level could likely result in a retest of 9620, and should we break below this level we will then look for a move down into 9514. If the moves to downside remain very strong, we could see a very sharp move into 9447.
US
SP500 – 2173 ( +21 or +0.98% )
The S&P is again pushing right up against our 2176 level and we will be watching closely for this market to break higher and make new all-time highs. It goes without saying- this week is FED week.
We will be discussing this market in more depth in the MEMBER PORTAL and covering the FOMC announcement LIVE during LIVE TV.
VOLATILITY ALERT: Consumer Confidence on Tuesday, Core Duarable Goods on Wednesday, FED Interest Rate Announcement on Wednesday, Quarterly GDP on Friday.
For a move higher we must now see the S&P break above 2176. Should this occur we will look for a move into 2194. A strong break and close above 2194 is likely to see the S&P set its sights for 2200. If we can hold above 2200 this week, we will ultimately then look for a move to 2234.
If we cannot break above 2176, we will watch for this market to hold 2150. A break below 2150 may see this market retest the previous all-time highs at 2137. This will be a key area to watch closely. A strong break through 2137 could result in a move back down to 2126, and should we break 2126 we cannot rule out a move back down into 2112 by the end of the week.
FOREX
AUD/USD – 0.7459 ( -119 or -1.57% )
The AUD was weaker last week on the anticipation the RBA may move to lower rates next week. This will be an interesting week leading up to next Tuesday’s decision.
VOLATILITY ALERT: Quarterly CPI on Wednesday.
For a move higher we would like to see the AUD break above 0.7489, followed by a break and close above 0.7561. A strong break and close above this level could then see a quick move to 0.7617 before a pause; and if momentum remains strong we will look for strong move into 0.7662.
If we cannot hold above 0.7489, we will look for a move back down to 0.7447. A strong break below this level may result in a move back down into 0.7364 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7282.
EUR/USD – 1.0975 ( -49 or -0.44% )
The EURO continues to grind its way lower and we are not too far from the lows set during BREXIT now. We have said it before- this market will make its move so BE PREPARED.
VOLATILITY ALERT: G20 Meetings Sunday-Monday, Annual M3 MOney Supply on Wednesday, Flash CPI, Quarterly Flash GDP and Bank Stress Test Results on Friday.
For a sustained move higher we would like to see the EURO break and hold above 1.0977, followed by a strong break above 1.1033. If this market can break and close above this level we will look for moves into 1.1064 and 1.1117. Breaks of these levels may see a retest of 1.1163. A break above 1.1163 may result in a retest of 1.1201, and if momentum remains strong we could see fast moves into 1.1248 before the end of the week.
If the EURO cannot break back above 1.0977, we will watch for a move back down to 1.0902 – 1.0897. A strong break and close below this level may see the EURO move back down to 1.0814 this week, and if momentum remains very strong we could see a sharp move all the way down to 1.7384.
GBP/USD – 1.3110 ( -72 or -0.55% )
The GBP continues its high volatility whilst it settles post BREXIT. This week is a rare ‘quiet’ week on the calendar front, so we’ll be watching what sentiment markets provide on the GBP.
VOLATILITY ALERT: G20 Meetings Sunday-Monday, Prelim Quarterly GDP on Wednesday.
For a move to the upside we would like to see this market break and close above 1.3227. A break above this level could see the market retest to 1.3426. Should we see a strong break through this level we will look for a quick move to retest 1.3495, and if momentum remains very strong a push to 1.3644 cannot be ruled out.
If we cannot break above 1.3227, we will look for a move back down to 1.3035. A strong break below this level could see a quick leg down into 1.2928. Should we break this level we will watch for a sharp move down to 1.2869; and if momentum is very strong a retest of the low at 1.2798 cannot be ruled out.
USD/JPY – 105.99 ( +115 or +1.1% )
The $/JPY continues its strong rally post the helicopter money stimulus Abe announced 2 weeks ago. We have been discussing this market for many weeks and shown some fantastic opportunities in our LIVE CHAT ROOM.
We will be discussing this market again this week in our MEMBER PORTAL and during LIVE TV.
VOLATILITY ALERT: Monetary Policy Statement on Friday.
For a continued move to the upside we would like to see this market hold above 106.30. A strong break and close above this level could see the USD/JPY rally to 107.75 quickly, and then 108.31 before a pause. Should we see continued upside, we will look for a move into 109.21
If however the USD/JPY cannot break hold above 106.30,, we will look for a move back down to 104.97. A strong break below this level could see the USD/JPY trade quickly down to 103.99, and should we continue to trade lower a sharp move to 103.21 is possible.
COMMODITIES
GOLD – 1322 ( -15 or -1.12% )
Gold drifted lower last week and there is pressure in this market to move higher given the continued strength in risk assets.
For a continued move higher we would like to see GOLD hold break above 1322 and more importantly 1333. If we can hold these levels we will look for a move back up to 1355. A break above 1355 could see GOLD retest the important 1375 level before another pause. This is a key area and should we see a strong close above 1375, we will look for a move to 1400.
If Gold cannot break above 1333, we will look for a move back down to 1303. A strong break and close below this level may result in a retest of 1294, and further breaks to the downside could see Gold trade retest the important 1276 level. If downside momentum continues to persist, a strong break through 1276 could see a 1257 by the end of the week.
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