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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes. For up to the minute market analysis see our live trading room.
INDICES
AUSTRALASIA
ASX – 7431 (-2 or -0.03%)
A flat week overall for the ASX to kick off the new year despite the gap up at the open.
For a move higher we would like to see the ASX hold above 7400. Should this occur, a move into 7450 could be expected; and if momentum is strong we cannot rule out moves to 7500 and 7600.
Failure to hold above 7400 means a potential move back into 7272. 7202 is the next support level down if 7272 doesn’t hold. If downside momentum is really strong then we could see a sharp move to 7091.
EUROPE
DAX – 15948 (+99 or +0.62%)
A failed attempt at breaking new high’s but the DAX crept higher nonetheless.
For the DAX to move higher we would like to see it hold above 15780. Should this occur then 16000 is the next level ahead. If upside momentum is strong then 16200 and 16500 cannot be ruled out.
To the downside, should we not see it hold above 15780, we will look for a move into support at 15500. A strong break and close below this handle and 15350 is the next level down. If downside pressure mounts then 15050 cannot be ruled out.
US
S&P 500 – 4674 (-144 or -3.02%)
The SPX took a big hit following its recent ‘Father Christmas rally’, mainly due to rising yields affecting big tech.
For a move higher we would like to see the S&P hold above 4630. Should this occur, we will look for a move to 4700; and if momentum is strong we cannot rule out moves to 4745 and 4800.
If we cannot hold above 4630, we could see this market move down into 4550. A break of this level however may result in a quick move down to 4482, and if momentum to the downside remains strong we may see a fast move back down to 4432.
FOREX
AUD/USD – 0.7268 (-143 or -1.97%)
The Aussie Dollar moved lower as risk-off sentiment swept across markets.
For a move higher this week, we would like to see it hold above 0.7170. We will then be targeting a move through 0.7234. If we see a strong break and close above this level then we can’t rule out a move to 0.7343.
If this market cannot close above 0.7170, we could see a move down into 0.7105. A strong break of this level may result in a move into 0.7012, however, any weakness below this level could see a sharp drop into 0.6995.
EUR/USD – 1.1361 (-9 or -0.08%)
The Euro continues to range trade after another rejection at the high of the range – what will be the catalyst for the next directional break?
For a move higher we would like to see the Euro hold above 1.1350. Should this occur we could see a move into 1.1425 before a pause. A break of this level could see this market rally further to 1.1500.
If the EURO cannot hold above 1.1350, we will see a move back into 1.1225. A strong break of this level may result in a move into 1.1155, however, any weakness below this level could see a sharp drop into 1.1105.
GBP/USD – 1.3234 (+357 or +2.7%)
The Cable continues to show strength as the UK dismisses further economic tightening with new lockdown restrictions.
For a move to the upside, we would like to see Cable hold above 1.3534 before a break higher through 1.3620. If this market can see a strong close above this level we may then see a strong push back into 1.3670. If upside momentum is really strong then a move back into 1.3750 can’t be ruled out.
Should we fail to hold above 1.3534, we will look for a move down to 1.3435. A break below this level however could see Cable further depreciate to 1.3290 by the week’s end and if momentum is very weak we cannot rule out a move to 1.3198.
USD/JPY – 115.54 (+43 or +0.37%)
The Dollar Yen now has upside momentum and it’s important to now hold above that multi-year level.
For a move to the upside, we must now see this market hold above 115.50. Should this occur we will look for a move into 116.00, and if upside momentum is strong we could see a move higher into 116.95 and potentially 118.55.
If we cannot hold above 115.50, we could see a move back to test 114.70 before a pause to the downside. A break below this level may result in a sharp move lower into 114.23, and any further breaks to the downside may see a bigger move into 113.20.
COMMODITIES
GOLD – 1796 (-32 or -1.75%)
Another false break for GOLD as it continues to go… nowhere.
For a move higher we need to see this market hold above 1786. Should this occur we could see a move back into 1814, and any break of this level could see a stronger move into 1850. If momentum is really strong then 1875 cannot be ruled out.
If Gold cannot hold above 1786, we will look for a move back down to 1756. A break below this level could see a move lower into 1740, and if momentum is very strong to the downside we could see a move to 1720.
CRYPTOS
BITCOIN – 41853 (-4447 or -9.6%)
A volatile move to the downside for Bitcoin as the threat of rising US interest rates continues to loom.
For a move higher we must now see this market close above 42000. Should this occur we could see a move into 44000 before retesting 47000. If upside momentum is really strong then we can’t rule out 50000.
Failure to close above 42000 could see a move down to 40000. If selling pressure takes control then we could see a move down to 37200. A close below this level and 35000 can’t be ruled out.
