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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 6473 (-255 or -3.79%)
The ASX followed the path of least resistance to the downside to record a second miserable week in a row.
VOLATILITY ALERTS:
Weds 11:30 – Retail sales m/m
For a move higher we would like to see the ASX close above 6480. Should this occur, a move into 6535 could be expected; and if momentum is strong we cannot rule out moves to 6650 and 6745.
Failure to close above 6480 means a potential move into 6405. 6300 is the next support level down if 6405 doesn’t hold. If downside momentum is really strong then we could see another leg down into 6200.
EUROPE
DAX – 12300 (-462 or -3.62%)
The DAX broke key multi-year support and looks like it may have further to fall.
VOLATILITY ALERTS:
Mon 18:00 – German IFO Business Climate
For the DAX to move higher we would like to see it close strongly above 12300. Should this occur then 12445 is the next level ahead. If upside momentum is strong then 12635 and 12965 cannot be ruled out.
To the downside, should we not see it close strongly above 12300, we will look for a move into support at 12095. A strong break and close below this handle and 11950 is the next level down. If downside pressure mounts then 11665 cannot be ruled out.
US
S&P 500 – 3697 (-186 or -4.79%)
The late bounce for the SPX on Friday at least gives ‘some’ hope for bulls…
VOLATILITY ALERTS:
Tues 21:30 – Fed Chair Powell speaks
Weds 00:00 – Cb Consumer Confidence
Thurs 00:15 – Fed Chair Powell speaks
Fri 22:30 – Core PCE price index m/m
For a move higher we would like to see the S&P close above 3740. Should this occur, we will look for a move to 3840; and if momentum is strong we cannot rule out moves to 3915 and 3965.
If we cannot close above 3740, we could see this market move down into 3665. A break of this level however may result in a quick move down to 3635, and if momentum to the downside remains strong we may see a fast move back down to 3550.
FOREX
AUD/USD – 0.6530 (-189 or -2.81%)
The Aussie Dollar sold off as risk-averse sentiment saw flow sucked out of high-beta currencies.
VOLATILITY ALERTS:
Weds 11:30 – Retail sales m/m
For a move higher this week, we would like to see it close above 0.6580. We will then be targeting a move through 0.6670. If we see a strong break and close above this level then we can’t rule out a move to 0.6715. Should momentum to the upside be really strong then 0.6745 could be targeted.
If this market cannot close above 0.6580, we could see a move down into 0.6485. A strong break of this level may result in a move into 0.6415, however, any weakness below this level could see a sharp drop into 0.6305.
EUR/USD – 0.9688 (-326 or -3.26%)
The Euro has now strongly closed below the much talked about parity handle – the question now is how low can it go?
VOLATILITY ALERTS:
Mon 23:00 – ECB President Lagarde speaks
Mon – Italian Elections Announcement
For a move higher we would like to see the Euro close above 0.9700. Should this occur we could see a move into 0.9810. A break of this level could see this market rally further to 0.9875 and 0.9950.
If the EURO cannot close above 0.9700, we will see a move into 0.9610. A strong break of this level may result in a move into 0.9460, however, any weakness below this level could see a move into 0.9335.
GBP/USD – 1.0848(-574 or -5.03%)
The Cable endured its worst week since the start of the pandemic and is now trading at levels not seen since the 80s.
For a move to the upside, we would like to see Cable close above 1.0850 before a break higher into 1.1000. If this market can see a strong close above this level we may then see a strong pushback into 1.1097. If upside momentum is really strong then a move back into 1.1250 can’t be ruled out.
Should we fail to close above 1.0850, we will look for a move down to 1.0800. A break below this level however could see Cable further depreciate to 1.1705 by the week’s end and if momentum is very weak we cannot rule out a move to 1.0500.
USD/JPY – 143.35 (+51 or +0.36%)
Central bank intervention saw the USDJPY endure an extremely volatile week, traders will need to be aware of possible further intervention at key overhead levels.
VOLATILITY ALERTS:
Mon – BoJ Gov Kuroda speaks
Tues 21:30 – Fed Chair Powell speaks
Weds 00:00 – Cb Consumer Confidence
Thurs 00:15 – Fed Chair Powell speaks
For a move to the upside, we must now see this market hold above 142. Should this occur we will look for a move into 145, and if upside momentum is strong we could see a move higher into 147.75 and potentially 150.
If we cannot hold above 142, we could see a move back to test 140 before a pause to the downside. A break below this level may result in a sharp move lower into 139.25, and any further breaks to the downside may see a bigger move into 137.20.
COMMODITIES
GOLD – 1644 (-31 or -1.85%)
Friday’s daily close has the makings of a textbook ‘breakout of consolidation’ and we must now anticipate further downside.
VOLATILITY ALERTS:
Tues 21:30 – Fed Chair Powell speaks
Weds 00:00 – Cb Consumer Confidence
Thurs 00:15 – Fed Chair Powell speaks
Fri 22:30 – Core PCE price index m/m
For a move higher we need to see this market close above 1645. Should this occur we could see a move into 1652, and any break of this level could see a stronger move into 1680. If momentum is strong then 1697 cannot be ruled out.
If Gold cannot close above 1645, we will look for a move down to 1612. A break below this level could see a move lower into 1590, and if momentum is very strong to the downside we could see a move to 1560.
CRYPTOS
BITCOIN – 18911 (-808 or -4.1%)
BTC still managing to hold above its recent lows despite selling pressure elsewhere in risk assets – a positive sign?
For a move higher we must now see this market close strongly above 20000. Should this occur we could see a move into 21715 before retesting 23675. If upside momentum is really strong then we can’t rule out 25875.
Failure to close above 20000 could see a move into 18700. If selling pressure takes control then we could see a move down to 17560. A close below this level and 14000 can’t be ruled out, maybe even a 12325 print.
