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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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We may take multiple trades throughout the week. Currently Trade View is Light Net Short.
AUSTRALASIA
ASX – 5395
The ASX continued to move higher last week and has now closed above 5366 and below 5424. These two levels will play an important role moving forward. Another point to note is that the range created in Oct 2013 is only a few points away which could potentially mean a slowdown in the current move.
For the up move to continue we would like to see 5424 broken early in the week followed by a strong break past 5458. If the momentum continues strong then we could see 5553 met. Once this occurs we will discuss in our members area.
For a down move to restart then we would like to see 5424 to hold as a solid level of resistance followed by a strong down move with long bars breaking and closing through 5366. Once this occurs then the area between 5271 – 37 could be tested. If broken then 5200 could be reached and if the downward momentum is strong then the ASX could find potential support near 5144 – 25.
EUROPE
FTSE – 6675
Looking at the FTSE it seems to be stuck in a 400 point range which is not necessarily a good thing as the grind higher is getting tougher. After an initial burst higher early last week there was no real follow through. One positive note is that it has closed above 6656 which could be important if it is to move higher.
For the FTSE to continue its up move we would like to see it reach 6740 early in the week. Once this is achieved it needs to push past this level with strong long up bars following through to 6779 – 91 area. If the upward momentum remains strong then we could see an extension towards 6847.
For the down move to restart then we would like to see an early break past 6656 followed by a push lower past 6628 reaching 6556. If this occurs with solid downward momentum then the FTSE could find potential support near 6433 – 6395 area as FICM our primary model is showing potential levels of support.
DAX – 9660
The DAX pushed higher once again with a 300+ point rally which was helped by other equity markets following the lead. Let’s see if it can continue this week.
For the DAX to continue higher from these levels then we would like to see a solid start to the week where the DAX reaches 9756 with a follow through reaching 9785. This will then complete the range set back in Dec 2013. Once this is achieved then we will revise accordingly.
If the DAX cannot complete the range and restarts its down move then we would like to see an early break past 9536 followed by strong momentum past 9431 and a solid break with a long down bar past 9376. The two levels we will be watching closely are 9249 and 9113 depending on the speed of the down move.
US
S&P – 1838
Another rally on the S&P last week, should indicate that all is good on the growth front? Lets see, Jobless claims rose(more people out of work), Industrial production fell (less people making stuff to sell), retail sales fell (less people buying stuff from shops). This must be good for the markets, why? because Bad is Good – remember last week’s fancy analysis! If not please read last weeks market brief.
For the S&P to continue higher then we will be watching 1848 – 50 area very closely. Once this level is broken we will be discussing potential upside levels in our members area.
If the S&P cannot break past the 1848 – 1850 area we would like to see a solid break past 1820 early this week followed by a continuation through 1805 and a close past 1794. If the momentum continues strong then we will be monitoring 3 levels 1777, 1760 and 1740 very closely.
FOREX
AUD.USD – 9031
Another rally for the AUD last week closing above 9000. The important thing to note is that it bounced off our FICM level of 8924 a couple of times before moving higher.
For the up move to have any real direction this week we would like to see 9105 broken early reaching 9181. Once this level is reached and broken then we could see 9222 reached. If the AUD continues to find strength then we could see it near 9287.
If the AUD cannot continue its move higher then we would like to see a solid break with long down bars back through 8964 reaching 8923. If the momentum is strong then we could see 8864. If this is also broken with long solid down bars then 8813 could be next and an ambitious extension to 8738 could occur.
EUR.USD – 13692
Another week of indecision for this pair as we saw a strong move down early in the week followed by a strong move up towards the end of the week. We will repeat last weeks comments, once the markets understand the true impact of the FED unwinding we will then see clear direction forming.
For the EUR to continue higher we would like to see a break past 13740 early in the week followed by another strong move past 13805. Once this is achieved and if the markets have decided that the EUR should go up then we could see the previous high of 13893 (set back in Dec 2013) tested.
For the EUR to move lower then we would like to see 13650 broken early followed by a break past 13606. If this occurs then we would like to see a solid break with a long down bar to break through 13515. The EUR then might find some potential short term support between 13432 and 13396.
GBP.USD – 16746
The GBP continued its rally last week to close only 1 point higher than the April 2011 high of 13745. Now this pair like many other Instruments is at a cross road and it will take something extra to push it higher.
If the GBP continues its strong move higher we would like to see this occur early in the week with strong long up bars before reaching 16914. Once this level is reached we will look to revise.
If the high of 2011 proves too much for this pair and the USD finds strength we could see a move lower with 16631 being reached. Once this level is broken then we could see 16570 and if the downward momentum is strong then we could see 16445 – 13 area.
USD.JPY – 10178
The USD lost ground again last week as it looks like the smart money is moving into safe-haven instruments like GOLD and YEN. Once Volatility kicks in this will be a great pair to watch for possible further sharp moves.
If the USD finds strength this week then we would like to see 10250 broken early with a long solid up bar before reaching 10283. If this level is then broken we could see 10347. For the USD to move higher then we would like to see 10347 broken with a long solid up bar before reaching 10429.
If the equity markets take a turn for the worst and we see a continuation of a down move then we would like to see 10150 broken reaching 10052. If the momentum is strong and if 10052 is broken then 9978 could be tested next. If this too is broken then the pair might find some support near 9881 – 63 area.
COMMODITIES
GOLD – 1318
It took it a while but GOLD has made a break and moved higher. Could this indicate that the smart money has already started to move into the safe haven plays? Equity markets going up, GOLD going up. Not a good combination.
For GOLD to continue higher we would like to see last weeks momentum continue with an early break past 1351. Once this occurs then 1391 could be reached. We will revisit GOLD upper levels once 1391 is reached as GOLD might find some resistance.
FICM, which is our primary model has indicated a potential slowdown near current levels. If the slowdown does occur and we see GOLD reverse back down then we would like to see an early break down past 1313 which could lead it to reach 1299. The move down could be short lived as GOLD could find support near 1269 – 82 area.
US LIGHT CRUDE OIL – 100.33
After a solid run for a few weeks OIL has decided to take a breather and moved sideways last week. We will watch for signs of a break over the next week. Therefore our comments remain the same.
For OIL to continue its move higher we would like to see another attempt at breaking and closing above 100.70 early in the week leading it towards 102.70. Once this level is reached and if it is broken with a solid long up bar then 104.07 – 32 area could be reached next.
If we see OIL break back down below 99.35 we could see 98.22 reached. If the momentum continues strong and we see a further breaks past 97.44 then 96.99 could be reached. If 97.44 and 96.99 are broken with long down bars OIL could reach 95.98 and possibly 94.55.
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