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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 Net Short.
AUSTRALASIA
ASX – 5462 ( – 50 or – 0.91% )
The ASX struggled to maintain the rally past the new highs and fell back down reaching a low of 5423 which is 1 point below our FICM level. The downward process of the current move has started and 5424 will play an important role. We are also seeing continued divergence on the ASX.
For the up move to restart we would like to see 5424 hold as a solid level of support followed by a break back past 5562 with a long up bar. If the momentum is strong when it breaks through 5562 then we could see a further push higher towards 5704. As mentioned last week, this would need to be based on strong momentum.
If the down move restarts then we would like to see an early break back down past 5424 with a long solid down bar. Once this level is broken then we could see temporary support near 5367. If this level does not provide support and is broken with a long down bar then 5270 could be seen with a possible extension down to 5201.
EUROPE
FTSE – 6814 ( +124 or + 1.85% )
The FTSE pushed higher last week closing almost 2% up. We are still noticing potential divergence forming on the current move.
For the up move to continue we would like to see strong upward momentum continue and a strong break and close past 6848 needs to occur early in the week. Once this occurs we could see an extension towards 6878 and possibly 6904.
For a down move to restart we would like to see 6848 become a solid level of resistance followed by a strong move back down through 6804 reaching 6740. If the momentum continues then we could see 6687 – 56 area reached.
DAX – 9550 ( +134 or + 1.42% )
The DAX rallied once again on low volumes. Once again volumes picked up on Thursday and Friday on the way down. NOTE: Potential divergence forming.
For the upmove to restart again then we would like to see an early break and close past both 9580 and 9627. If the momentum continues strong past this then we could see further extension towards 9735 – 62 area which would complete the range set back in DEC 2013.
If the down move is to start then we would like to see a solid break early in the week past 9505 pushing towards 9401 Once this level is broken then we could see the area between 9365 – 9321 reached. As mentioned previously if the downward momentum continues with heavy volume then the area between 9222 – 9201 will play an important role for the Index.
US
S&P – 1879 ( +14 or + 0.75% )
The S&P moved higher last week but was unable to hold the rally on Friday after better than expected job numbers. Without trying to call the top of this market, is it actually losing steam? Even though it moved higher our comments remain the same as last week with slight amendments on the upside.
For the S&P to break higher we would like to see an early break and close past 1884, once this level is broken then we would like to see solid upward momentum break through the 1897- 1901 area before reaching 1915.
For the down move to continue then we would like to see an early break past 1854 reaching 1841. If the downward momentum becomes stronger then we could see 1812 tested again.
FOREX
AUD.USD – 9276 ( – 1 or – 0.01% )
The AUD is range bound at the moment, therefore our comments from last week remain the same.
For the medium term up move to continue then we would like to see an early break back above 9337 followed by a strong push towards 9391. Once this level is reached and broken then we could see 9461 tested again with a possible extension towards 9491.
If the AUD continues its downward move then we would like to see 9226 broken early before reaching the area between 9181 – 76. If this area is also broken with strong downward momentum we could see 9116 followed by 9035.
EUR.USD – 13833 ( + 36 or + 0.26% )
Last week saw intraday swings of 100 points as the EUR is now in a wait and see mode. As mentioned last week be prepared for a large move which could form the next true direction. As the EUR has only closed 36 points above our previous brief then our comments remain the same, once again caution should be observed with this pair.
For the up move to continue we would like to see a solid break and close above the highs in March of 13966, if this occurs we will discuss in our members area.
For the EUR to restart another move down then we would like to see 13805 broken early reaching 13786. Once this is broken we could see 13722. If 13722 is broken with a long down bar then we could reach 13685 and possibly 13589.
GBP.USD – 16868 ( +72 or + 0.43% )
Another move higher for the GBP, but once again a sell off on Friday. We also saw it reach a high of 16919 which was only 5 points above our 16914 level mentioned last week. As it has now closed above the previous range we will be monitoring it closely for a new formation to start. NOTE: divergence is forming on the current move.
If the GBP continues with its move higher then we would like to see a solid break past 16914 – 16919 area. Once this occurs we will discuss it in our members area.
If the divergence slows the up move and we see a reverse back down then we would like to see 16749 broken early in the week which could lead the pair to reach 16686. If the momentum is strong and we see a break past 16686 then 16537 could be next.
USD.JPY – 10219 ( – 1 or – 0.01% )
As the markets moved higher we saw the USDJPY struggle with direction. This pair is unique in the fact that both countries are facing some uphill battles in economic recovery
We have mentioned in the past that this pair has the potential to disconnect its correlation from the S&P at any time. We will be watching for this and if we feel it has happened we will make not in our members area. As the pair has closed 1 point lower our comments remain the same as last weeks brief.
If the USD finds strength then we would like to see a strong break above 10225 with a long up bar. Once this occurs we could see 10272. We would then like to see a long up bar (similar to the one on 08 April 2014, but in the opposite direction) breakthrough 10309 before pushing higher.
If a new downward move forms then we would like to see a break past 10194 towards 10116. Once this is broken we could see 10078. If we are to see a break past 100 again reaching 9977 then we would like to see 10078 broken with a long solid down bar.
COMMODITIES
GOLD – 1299 ( -3 or -0.23% )
Early in the week we saw GOLD move lower but then we saw Friday’s $30 move possibly due to escalating tensions in the Ukraine. Take Note as GOLD might become a safe haven again. As GOLD has closed only 3 points lower we maintain our comments from last week. Also potential divergence is forming.
For GOLD to move higher from here then we would like to see 1319 broken early in the week followed by a long solid up bar breaking and closing past 1327. Once this occurs then we could see 1352. If we see further aggressive down moves on equity markets and GOLD becomes the safe haven of choice, we could see 1389 – 93 area reached very quickly.
If the down move restarts then we would like to see 1284 broken early in the week reaching 1269. As we saw last week GOLD bounced off 1269 (low 1268) therefore we would like to see this level broken with a long solid down bar extending towards 1246.
US LIGHT CRUDE OIL – 99.91 ( -71 or -0.71% )
OIL moved lower again last week reaching a low of 98.72. The big question now will be, can it break back above $100?
For the upmove to restart we would like to see a strong solid break and close past 100.32 and 100.85. Once this occurs then we could see 101.90. If the upward momentum is strong and we break 101.90 then we could see 102.76 reached. If we see 102.76 broken then OIL could settle near 103.93.
If the $100 level proves to be out of reach and the down move continues then we would like to see 99.34 broken again early in the week with a long solid down bar. Further downward momentum could drive OIL down past 98.12 and towards 97.43 and even extend to 96.99.
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