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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 7160 (-189 or -2.57%)
The ASX sold off aggressively on Friday along with all other global indices – is this the start of a larger correction?
VOLATILITY ALERTS:
Weds 08:00 – Commonwealth Bank Manufacturing Pmi
Weds 10:30 – GDP Q/q
For a move higher we would like to see the ASX close above 7200. Should this occur, a move into 7272 could be expected; and if momentum is strong we cannot rule out moves to 7400 and 7500.
Failure to close above 7200 means a potential move back into 7091. 7000 is the next support level down if 7091 doesn’t hold. If downside momentum is really strong then we could see a sharp move to 6895.
EUROPE
DAX – 16208 (+58 or +0.36%)
The DAX got wrecked and is back testing key support that has proved sufficient in other pullbacks so far this year – can it hold again?
For the DAX to move higher we would like to see it hold above 15050. Should this occur then 15345 is the next level ahead. If upside momentum is strong then 15580 and 15780 cannot be ruled out.
To the downside, should we not see it hold above 15050, we will look for a move into support at 14790. A strong break and close below this handle and 14415 is the next level down. If downside pressure mounts then 14141 cannot be ruled out.
US
S&P 500 – 4579 (-127 or -2.7%)
The world’s largest stock index didn’t escape the pain on Friday’s sell-off – will the new virus fears push it lower or is this a flush for a bounce-back?
For a move higher we would like to see the S&P close above 4600. Should this occur, we will look for a move to 4635, and if momentum is strong we cannot rule out moves to 4700 and 4750.
If we cannot close above 4600, we could see this market move down into 4555. A break of this level however may result in a quick move down to 4480, and if momentum to the downside remains strong we may see a fast move back down to 4432.
FOREX
AUD/USD – 0.7330 (-118 or -1.63%)
Risk off sentiment across global markets saw the Aussie Dollar sold aggressively and is now set to test its yearly low – double bottom?
VOLATILITY ALERTS:
Weds 08:00 – Commonwealth Bank Manufacturing Pmi
Weds 10:30 – GDP Q/q
For a move higher this week, we would like to see it close back above 0.7250 We will then be targeting a move through 0.7342. If we see a strong break and close above this level then we can’t rule out a move to 0.7423.
If this market cannot close above 0.7250, we could see a move down into 0.7222. A strong break of this level may result in a move into 0.7170, however, any weakness below this level could see a sharp drop into 0.7065.
EUR/USD – 1.1309 (+28 or +0.25%)
The Euro rallied on Friday as ‘risk off’ flow seemed to favour the JPY over the USD – don’t be surprised to see a fade back down.
For a move higher we would like to see the Euro close 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 – 1.3339 (-105 or -0.78%)
The Cable broke new lows for the year with several lower closes within the week.
For a move to the upside, we would like to see Cable close above 1.3435 before a break higher through 1.3534. If this market can see a strong close above this level we may then see a strong push back into 1.3620. If upside momentum is really strong then a move back into 1.3666 can’t be ruled out.
Should we fail to close above 1.3435, we will look for a move down to 1.3290. A break below this level however could see Cable further depreciate to 1.3200 by the week’s end and if momentum is very weak we cannot rule out a move to 1.3055.
USD/JPY – 113.23 (-78 or -0.68%)
The Dollar Yen dumped on Friday as more risk-off capital flow favoured the Yen – another false breakout of the multi-year highs…
For a move to the upside, we must now see this market hold above 113.20. Should this occur we will look for a move into 113.70, and if upside momentum is strong we could see a move higher into 114.55 and potentially 115.47.
If we cannot hold above 113.20, we could see a move back to test 112.25 before a pause to the downside. A break below this level may result in a sharp move lower into 111.70, and any further breaks to the downside may see a bigger move into 111.25.
COMMODITIES
GOLD – 1787 (-58 or -3.14%)
Not a great week for Gold bulls as it pierced down through recent consolidation following the news that Fed chair Powell will be serving a new term.
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 – 53959 (-4520 or -7.73%)
Bitcoin has entered a new bear market after it declined > 20% from its recent highs – are we set for another leg lower or can it hold above 50k?
For a move higher we must now see this market close above 55000. Should this occur we could see a move into 58000 before retesting 60000. If upside momentum is really strong then we can’t rule out 63482.
Failure to close above 55000 could see a move down to 52860. If selling pressure takes control then we could see a move down to 50000. A close below this level and 47000 can’t be ruled out.
