This market brief is an overview of the week ahead and some of the events we see as being important to the markets.
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INDICES AUSTRALASIA ASX – 5219 ( +92 or 1.79% ) After a volatile week the ASX has finally broken to to the upside. VOLATILITY ALERT: Unemployment Rate on Thursday. For a continued move higher we would like to see a strong break and close above 5238. Should we break this level we could see a move to 5294, a continued rally could see this move head to 5372 before a pause.If momentum remains strong we could see an extended move into 5362. If we fail to break 5238, we will be looking for a move back down to 5161; and a break below this could result in a move back into 5090. A strong break and close below 5090 could see a quick move back down to 4997, and a strong break and close below this level may result in a sharp move back down to 4921.
EUROPE DAX – 9884 ( +109 or 1.12% ) We said last week’s ECB event was not an event to be missed, and what a wild end to the week it was! A huge 500 point reversal to the downside followed by a complete reversal the next day allowed us to take some great profits out of these markets, which we discussed in our LIVE CHAT ROOM . For a continued move to the upside we would like to see a strong break and close above 9907, followed by a strong break through this level may see a quick move into 10013 before a pause. If momentum remains strong, 10131 and 10158 are important levels to watch, and if we continue to rally we would not rule out a blow-off move into 10382. If we fail to break above 9907 we will be looking for a move back down to 9822 and should this level fail, we could see a move to 9620. A strong break below this level could see the DAX trade all the way back down to 9560; and if momentum remains strong we will look for a move back down to 9386.
US SP500 – 2020 ( +24 or 1.2% ) The S&P continues to rally having broken last week’s highs. This week is FED week so once again we should see some wild volatility towards the end of the week. We will be discussing this event in real-time in the LIVE CHAT ROOM . VOLATILITY ALERT: Retail Sales on Tuesday, CPI on Wednesday, FOMC cash rate on Thursday. For a move higher we would like to see a the S&P hold 2019, followed by this level holding as support. Should this occur we could see a move back up into the important 2040 level. A strong break and close above 2040 could result in a move into 2054, and if momentum remains strong we will look for final moves to 2066 and 2079 before a pause. If we do not see a strong break and close above 2019, we will look for a move back down to 2002. A strong break and close below this level may likely see 1990 and 1986; and further breaks to the downside could see the S&P back down to 1968-1972. Should the downside momentum we will not rule out a move back down to 1948.
FOREX AUD/USD – 0.7561 ( +125 or 1.68% ) The Aussie dollar closed right at our 0.7561 and is now at a very important area. Will we see another big push higher?? VOLATILITY ALERT: Unemployment Rate on Thursday. For a move higher we would now like to see the AUD hold above 0.7389, followed by a strong break and close through 0.7447. A break above this level may then see the AUD head to 0.7489 before a pause. Should momentum remain strong, we will look for a move higher into 0.7561 and if the rally continues we may see a strong push into 0.7645. On the downside, a strong break below 0.7389 may see the AUD head back down to 0.7365. A strong break and close below this level could result in a move down to 0.7305, and if this move turns into a false breakout we could see a move back down into 0.7229 – 0.7236.
EUR/USD – 1.1147 ( +141 or +1.28% ) After an initial sell-off following the ECB’s rate cut, we saw some heavy US dollar selling which saw the EURO completely reverse and put in yet another week higher. With little news in the EURO this week, we will be watching this market closely as we head into Thursday’s FOMC.
For a sustained move higher we would like to see 1.1117 hold followed by a break back above 1.1163 and 1.1201. If momentum to the upside remains strong we will look for further moves higher into 1.1248; and if there is no stopping the upside we could see strong moves into 1.1347 and 1.1385.
On the downside, a strong break and close back below 1.1117 could see the EURO head back down to 1.1064 and 1.1033. A strong break below these levels could see a quick move down to 1.0897; and a further break result in a retest of 1.0814. If there is continued downside pressure we will then look for a move down into 1.0743 – 1.0734. Should these levels break we could see a very sharp move alll the way back down to 1.0636.
GBP/USD – 1.4383 ( +151 or 1.06% ) The GBP ha now reached an important area and this week will be very crucial should the GBP wish to continue this move higher. VOLATILITY ALERT: Annual Budget on Wednesday, GBP Cash rate on Thursday.
For a move to the upside we would like to see 1.4380 hold as support, followed by a strong break through 1.4417. Should this occur we will look for a move up into 1.4469. A break above this level could see cable quickly reach 1.4538, and if momentum remains strong we could see a push all the way up into 1.4630.
If we cannot close above 1.4382 and 1.4417, we could see a move back down to 1.4223. A break below 1.4223 could see the GBP head lower 1.4194 before a pause. If momentum to the downside remains strong we could see 1.4079 and 1.4039; and any below these levels we will be watching 1.3853.
USD/JPY – 113.81 ( +3 or 0.03% ) Once again another sideways week for the USD/JPY and as such our comments remain unchanged. VOLATILITY ALERT: Monetary policy statement on Tuesday. For a continued move to the upside we would like to see a strong break and close above 114.14. A break above 114.14 could result in a retest of 114.55, and if momentum remains strong we could see a move higher into 115.05 and 115.53 before a pause. If momentum to the upside is very strong we may see fast and sharp moves into 116.08 and 117.41. If the USD/JPY cannot close above 114.14, we will be watching for a move back down to 113.37. A strong break and close below this level could see the USD/JPY move down to 112.40. If momentum to the downside continues we may see a retest 111.73. and 111.09. A break below this level could see a fast and sharp move all the way down to 109.94.
COMMODITIES GOLD – 1250 ( -8 or 0.64% ) Last week we asked the question in Gold- Is a short-term high in? Will be discussing this in more detail in our MEMBER PORTAL this week. VOLATILITY ALERT: FOMC cash rate on Thursday.
For a continued move higher we would like to see a break and close through 1258, followed by a strong break and close through 1276. Should this occur we could see a strong move to 1294, and a break of this level could see a move into 1303 before another pause. If momentum to the upside remains very strong we could see another blow-off type move into 1322.
If Gold cannot break above 1258 and 1276, we will look for a move back down to 1247. A strong break and close below this level we could see Gold trade back down to 1222; and additional breaks lower couldsee this market head back down to 1206.
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