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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 7354 (+284 or +4.02%)
The ASX ripped higher thanks to tailwinds from both Chinese and European equities.
VOLATILITY ALERTS:
Tues 12:00 – RBA Gov Lowe speaks
For a move higher we would like to see the ASX hold above 7272. Should this occur, a move into 7400 could be expected; and if momentum is strong we cannot rule out moves to 7485 and 7545.
Failure to hold above 7272 means a potential move back into 7200. 7090 is the next support level down if 7200 doesn’t hold. If downside momentum is really strong then we could see another leg down into 7000.
EUROPE
DAX – 14424 (+916 or +6.78%)
Remarkably, the DAX has now almost entirely faded the ‘invasion’ sell off – bear market rally to sell or a V reversal?
VOLATILITY ALERTS:
Fri 20:00 – German IFO Business Climate
For the DAX to move higher we would like to see it hold above 14140. Should this occur then 14780 is the next level ahead. If upside momentum is strong then 15050 and 15345 cannot be ruled out.
To the downside, should we not see it hold above 14140, we will look for a move into support at 13610. A strong break and close below this handle and 13250 is the next level down. If downside pressure mounts then 12445 cannot be ruled out.
US
S&P 500 – 4469 (+261 or +6.2%)
The SPX cashed in on the feel-good flow from Asian and European equities, as well as the ‘peak hawkish’ FOMC – but is this a sustainable move?
VOLATILITY ALERTS:
Tues 01:00 – Fed Chair Powell speaks
Weds 23:00 – Fed Chair Powell speaks
For a move higher we would like to see the S&P hold above 4430. Should this occur, we will look for a move to 4480; and if momentum is strong we cannot rule out moves to 4555 and 4600.
If we cannot hold above 4430, we could see this market move down into 4375. A break of this level however may result in a quick move down to 4330, and if momentum to the downside remains strong we may see a fast move back down to 4135.
FOREX
AUD/USD – 0.7413 (+129 or +1.77%)
The Aussie Dollar bulls joined in the fun as it ripped higher and now wants to threaten new yearly highs after a strong weekly close.
VOLATILITY ALERTS:
Tues 12:00 – RBA Gov Lowe speaks
For a move higher this week, we would like to see it hold above 0.7392. We will then be targeting a move through 0.7473. If we see a strong break and close above this level then we can’t rule out a move to 0.7530. Should momentum to the upside be really strong then 0.7600 could be targeted.
If this market cannot hold above 0.7392, we could see a move down into 0.7345. A strong break of this level may result in a move into 0.7285, however, any weakness below this level could see a sharp drop into 0.7250.
EUR/USD – 1.1050 (+138 or +1.26%)
Even the Euro caught a bid as USD bears returned to the fray – however, after being unable to close the week above resistance could we see a pullback from here.
For a move higher we would like to see the Euro hold above 1.1000. Should this occur we could see a move into 1.1105. A break of this level could see this market rally further to 1.1155 and 1.1225.
If the EURO cannot hold above 1.1000, we will see a move back into 1.0875. A strong break of this level may result in a move into 1.0780, however, any weakness below this level could see a sharp drop into 1.0575.
GBP/USD – 1.3180 (+143 or +1.1% )
The Cable came off its yearly lows but reacted rather unimpressively to the BoE’s third rate hike in as many meetings.
VOLATILITY ALERTS:
Weds 18:00 – Core CPI
Weds 23:00 – BoE Gov Bailey speaks
For a move to the upside, we would like to see Cable close above 1.3198 before a break higher into 1.3290. If this market can see a strong close above this level we may then see a strong push back into 1.3435. If upside momentum is really strong then a move back into 1.3534 can’t be ruled out.
Should we fail to close above 1.3198, we will look for a move down to 1.3056. A break below this level however could see Cable further depreciate to 1.2980 by the week’s end and if momentum is very weak we cannot rule out a move to 1.2855.
USD/JPY – 119.15 (+186 or +1.59%)
One market very much on the move is the Dollar Yen as it ripped through multi year resistance – mainly due to significant weakness in the Yen.
VOLATILITY ALERTS:
Tues 01:00 – Fed Chair Powell speaks
Weds 23:00 – Fed Chair Powell speaks
For a move to the upside, we must now see this market hold above 118.55. Should this occur we will look for a move into 119.30, and if upside momentum is strong we could see a move higher into 120.42 and potentially 121.75.
If we cannot hold above 118.55, we could see a move back to test 117.85 before a pause to the downside. A break below this level may result in a sharp move lower into 117, and any further breaks to the downside may see a bigger move into 116.10.
COMMODITIES
GOLD – 1920 (-67 or -3.37%)
Gold dropped lower again as hope for peace between Russia and Ukraine increased – but is it more hope than evidential?
For a move higher we need to see this market hold above 1915. Should this occur we could see a move back into 1965, and any break of this level could see a stronger move into 2000. If momentum is strong then 2015 cannot be ruled out.
If Gold cannot hold above 1915, we will look for a move back down to 1900. A break below this level could see a move lower into 1875, and if momentum is very strong to the downside we could see a move to 1830.
CRYPTOS
BITCOIN – 41849 (+3034 or +7.82%)
Bitcoin moved higher with the global risk-on sentiment but maybe not as much could be expected – are there enough buyers down here to force a move higher?
For a move higher we must now see this market hold above 39839. Should this occur we could see a move into 43233 before retesting 44000. If upside momentum is really strong then we can’t rule out 47000.
Failure to hold above 39839 could see a move down to 35050. If selling pressure takes control then we could see a move down to 32300. A close below this level and 29444 can’t be ruled out, maybe even a 27434 print.
