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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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
ASX – 5740 ( +44 or +0.77% )
The ASX continues within its tight range and again we remain on alert for a big breakout. We will be discussing this market exclusively in the LIVE CHAT ROOM.
For a continued move higher we would like to see the ASX close above 5746. Should this occur we will look for a retest of 5777, and a strong close above this could result in a quick move to 5823. If momentum is strong we will then look for a rally into 5875 and 5921.
If the ASX cannot close and hold above 5746, we are likely to see a strong move down into 5671 and 5648. A close below this level may result in more selling into 5606 and if momentum is very strong a move down into 5582 and 5521 cannot be ruled out.
EUROPE
DAX – 12171 ( +172 or +1.43% )
The DAX is showing signs of a base with many key levels below.
VOLATILITY ALERTS:
Tue 19:00 – German ZEW Economic Sentiment
Wed 17:30 – German Flash Manufacturing & Services PMI
Fri 18:00 – German Ifo Business Climate
For a continued move to the upside we must now see the DAX hold above 12115. Should this occur we will look for a move back up to 12198. A strong break of this level could see the DAX rally quickly to 12384; and if momentum is very strong we will look for a move to 12566
If the DAX fails to hold above 12115, we will look for a move down to 12044. A close below this level could see a move down into 11875. Below this we have key support between 11755 – 11790. However should these levels break be prepared for a potentially strong move down into 11519.
US
SP500 – 2427 ( -14 or -0.57% )
Last week we posed the question whether volatility was here to stay and this appears to be the case. This week we have the all-important Jackson Hole Symposium and will be discussing this market in more detail in the MEMBER PORTAL.
VOLATILITY ALERTS:
Thu 00:00 – New Home Sales
Fri 00:00 – Existing Home Sales
FRI ALL DAY – Jackson Hole DAY 1
SAT ALL DAY – Jackson Hole DAY 2
For a move higher we would like to see the S&P hold above our key level at 2418, followed by a strong break and close above 2440. Should this occur we anticipate further upside over the coming week. A strong break of 2440 could see retests of 2465 and 2477.
If we cannot hold above 2418, we will look for a move to retest of strong support at 2400. A strong break below this level could see the S&P spike down 2392, and a close below this level could see this market trade 2386 by week’s end.
FOREX
AUD/USD – 0.7928 ( +35 or +0.44% )
The Aussie dollar strengthened slightly following last week’s better than expected employment numbers.
For a move higher we must now see this market hold above 0.7903, followed by a strong break and close above 0.7988. Should this occur we will look for this market to test 0.8034. A strong break and close above 0.8034 could see this market post further gains into 0.8118.
If we cannot hold above 0.7903, we could see the AUD retest 0.7833. Should we break lower however, we will look for a move back into 0.7779 and if downside momentum continues we could see 0.7729 quickly before another pause.
EUR/USD – 1.1759 ( -62 or -0.52% )
The EURO is range bound and with no follow through to the downside, is this market setting up a base for further gains? We will be discussing this in more detail in the LIVE CHAT ROOM.
VOLATILITY ALERTS:
Tue 19:00 – German ZEW Economic Sentiment
Wed 17:00 – ECB President Draghi Speaks
Wed 17:00 – French Flash Manufacturing & Services PMI
Wed 17:30 – German Flash Manufacturing & Services PMI
Wed 18:00 – Euro area Flash Manufacturing & Services PMI
Fri 18:00 – German Ifo Business Climate
Sat 05:00 – ECB President Draghi Speaks (Jackson Hole)
For a sustained move higher we would like to see the EURO hold above 1.1738 followed by a strong close above 1.1834. Should this occur we could see a strong move into 1.2042.
If the EURO cannot hold above 1.1738, we will look for a move back down into 1.1678. A break below this level will likely result in a move to 1.1613; and should momentum remain strong to the downside a move to 1.1496 cannot be ruled out.
GBP/USD – 1.2871 ( -138 or -1.06% )
The GBP was down for the third straight week finding support and closing near our key 1.2868 level.
VOLATILITY ALERTS:
Wed 18:30 – Second GDP Estimate (quarterly)
Wed 18:30 – Prelim Business Investment (quarterly)
For a continued move to the upside, we would like to see Cable hold above 1.2868 followed by a break above 1.3035. Should this occur we will look for the Pound to rally into 1.3277 before a pause. A break of this level is very likely to see the GBP/USD test 1.3309, and if momentum is very strong we will look for a move to 1.3534.
If we fail to hold above 1.2868, we may see this market trade back into 1.2720 before another pause. If momentum is strong and we break and close below 1.2720, we could see a sharp move lower into 1.2600.
USD/JPY – 109.19 ( +4 or +0.04% )
The $/YEN was only marginally higher last week and as such our levels remain unchanged.
VOLATILITY ALERTS:
Mon 09:50 – Prelim GDP (quarterly)
For a move to the upside we will look for this market break and close above 109.21. Should this occur we will look for a move back up to 109.94 before a pause. If momentum remains strong to the upside, we will look for a move to 111.09 before the week’s end.
If we cannot close above 109.21, the YEN may see further downside into 108.31. A strong break and close below this level could see the YEN trade lower into 107.75; however should this level break this could spell trouble for the YEN with a very fast move down to 105.45.
COMMODITIES
GOLD – 1284 ( -5 or -0.39% )
GOLD put in a very interesting reversal on Friday again out our key levels and this will be an interesting week for GOLD. We will be discussing this in more detail in the LIVE CHAT ROOM.
For a continued move higher we would like to see this market hold above 1278, followed by a retest of 1294. A strong break above 1294 could see this market head back up to 1303, and if momentum remains strong we could see a move into 1313 before another pause.
If Gold cannot hold above 1278, we will look for a strong move back down into 1263 and 1257. A break and close below this level could then result in a move to 1247 before the week’s end.
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