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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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AUSTRALASIAN SESSION
ASX – 4756
The ASX continued its down move last week and overextended breaking through last week’s target of 4719 with a low of 4656. The ASX then bounced back to close 100 points higher from its low.
If the down move is to continue then 4719 needs to be broken again and early this week. If so, 4582 could be reached and play an important part and act as support. If it doesn’t act as support and 4582 is broken, then the previously mentioned target of 4417 could be reached.
If the bounce occurs of the lows then we would be looking for a range of 4903 and 4982 as key levels. If the rally breaks through these levels then we could see 5048 as resistance. For this to occur we would first like to see 4796 broken with long up bars.
EUROPEAN SESSION
FTSE – 6281
The FTSE followed the rest of the world markets downwards and has potentially found support near April lows of 6212, with 6209 reached.
If the down move continues past 6212 again, then we could see 6080 reached, but as the current move is in a slowdown process the break needs to occur early, otherwise the full effect of the slowdown will occur and a reversal could take place.
If 6212 provides support and if we see a break past 6306 then we could see 6421 reached.
DAX – 8084
The DAX moves have been subdued compared to the rest of the markets. Even though we saw a new low created in this down move, the bounce back up with a close at 8084 (which is above 8003-8006) area has our attention.
The DAX got as low as 8034 which was 31 points from our downside target of 8003. Now that most of the other markets have reached our downside targets, this could be the start of a potential reversal.
If a down move by the DAX is to continue past 8003 then we could be in for a ride. As we have seen more than once, when the DAX overextends it does so with shear force, and if it does not find support near 7753 then an ambitious downside target of 7584 could be reached.
If the DAX is correct and the other markets have overextended their down moves, then we would like to see a short term level of 8175 reached, and if reached looking for a rally past 8351.
Note: the DAX will be monitored closely this week and we will post updates in our exclusive Trader’s Community. Please contact us for information on how to gain access.
US SESSION
S&P – 1624
The S&P down move became volatile last week with a 50 point range from high to low. The low was 1597 which could be the difference between a continued down move and a potential reversal.
For the down move to have any real effect, we would like to see 1597 broken with an aggressive move and preferably past 1585 before our next level of 1547 is reached.
If an upmove and a potential reversal is on the way, then we see the 1642-48 level playing an important role. This area indicates a lot of resistance, and if its not broken early in the week and with long up bars than any S&P rally might be short lived.
NASDAQ – 2940
The NASDAQ is trying to make moves lower, but it simply does not have the same momentum as some of the other markets. The NASDAQ tried to breach our level of 2890 which we mentioned last week, but when it reached a low of 2897 it was met with a 60+ point rebound.
If the down move is to continue and if this 60+ point bounce is just window dressing, then we would like to see a serious attempt at breaking past 2890 early this week. If broken then we will be watching 2778-2784 area.
If an up move is to start then a solid break above 2977 followed by 3006 needs to occur which could then lead it the previous highs.
FX MARKETS
AUD.USD – 9568
The AUD down move was stopped in its tracks with a decent 300+ point rally, but its close is now below the May 2012 low of 9580. This is important, because when a potential reversal move (up) is halted by a significant previous level then it is likely a signal of a continuation of the current longer move (down).
If the continuation of this down move is to occur then 9580 needs to become a solid resistance level. The pair needs to stay below it and move back down past 9325 before the full effect of this rampant down move takes effect.
If this bounce/rally holds then last week’s level of 9680 needs to be broken early this week. Once this level is broken then we could see 9791 but only with long up bars.
EUR.USD – 13342
The EUR continued its strong rally and made its move breaking past 13285 with a solid long up bar. Even though the EUR is now in a potential slowdown process.
If this up move is to continue then our previous target of 13433 needs to be broken early in the week which could then see it lead towards 13713.
If the slowdown takes effect and a down move occurs, then a break below 13285 could lead the way to 13176 being reached before potentially reaching 13084.
GBP.USD – 15701
The GBP made another move up to close staying above an important level of 15597, even though FICM our proprietary system is indicating a potential slowdown process.
If this up move is to take full effect, then 15808 and 15893 need to be broken early in the run if it has any chance of reaching 16068. This needs to be done with solid long up bars.
Otherwise, if the slowdown process takes effect and a move back down past 15597 could help the pair see 15185 once again.
USD.JPY – 9404
The JPY continued its strength last week and is sitting near its lows.
If the down move is to continue then we would like to see 9378 broken before 9243 is reached.
If the bounce from here then we would like 9440 broken before seeing 9506 and possibly 9785.
COMMODITIES
GOLD – 1390
GOLD looks like it is trying to consolidate around this area and like many other traders we will be highly anticipating the next move.
If an upmove plays out then it will need to hold above 1386 and break past 1394 before testing previous resistance level of 1421.
If the down move is to continue then we would like 1386 broken aggressively and taking out 1372 at the same time which could lead to 1356 and possibly 1338.
US LIGHT CRUDE OIL – 9781
LIGHT CRUDE made another move up last week and this time breaking through our target of 9742 by reaching a high of 9823.
If this up move is to continue and 9744 needs to hold and 9823 needs to be broken before our next target of 9946 is reached.
On the downside if the break back below 9744 occurs then the levels we will be watching are 9577 followed by 9479.
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