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 ASX – 5829 ( -63 or -1.07% ) The ASX remains trapped in a narrow sideways range and we are now looking for a breakout soon. We will be discussing this in the LIVE CHAT ROOM this week. VOLATILITY ALERT: Monetary Policy Meeting Minutes on Tuesday, Unemployment Rate on Thursday. For a continued move higher we must now see the ASX break above 5921. Should this occur we will look for a move to 5985. A break through this level could see a retest of 6000; and if momentum is very strong we cannot rule out a move to 6140. If the ASX cannot break above 5921, we will look for a move back down to 5823. A strong break and close below this level could see the ASX test 5777, and if momentum is strong we could quickly see further moves down to 5746 and 5705.
EUROPE DAX – 12782 ( -47 or -0.37% ) Last week the DAX held support at our 12714 level and this will be the key level going into this week. VOLATILITY ALERT: Quarterly Flash GDP and German ZEW Sentiment on Tuesday. For a continued move to the upside we must see the DAX hold above 12714. Should this occur we could see a strong move 13110, and if momentum is very strong to the upside we cannot rule out a move to 13205. If the DAX fails to hold above 12714, we will look for a move back down to 12536. A strong break below this level is likely to see a push further down into 12384.
US SP500 – 2391 ( -10 or -0.42% ) After another attempt early in the week at the 2400 all-time highs, the S&P gradually fell lower however like the DAX maintained support at the key 2386 level. We will be discussing this market in more detail in the LIVE CHAT ROOM this week. VOLATILITY ALERT: Building permits on Tuesday. For a move higher we would like to see the S&P hold above our key level of 2394. Should this occur we will look for a move to 2418. A strong break of this level could see the S&P rally fast into 2465. If we cannot hold above 2394, we will look for a move back down to 2386. Below this we will look for a move back down to key support levels at 2370 and 2360.
FOREX AUD/USD – 0.7386 ( -30 or -0.4% ) The AUD has now put in a short-term low. This week we have unemployment numbers which could prove pivotal to where this market moves by the week’s close. VOLATILITY ALERT: Monetary Policy Meeting Minutes on Tuesday, Unemployment Rate on Thursday. For a move higher we we would like to see the AUD hold above 0.7364, followed by a break and close above 0.7447. A strong break and close above this level could see a quick move to 0.7489 before a pause; and if momentum remains strong we will look for a move into 0.7561. If we cannot hold above 0.7364, we will look for a move back down to 0.7282. A strong break below this level may result in a move back down into 0.7229 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7169.
EUR/USD – 1.0931 ( -68 or -0.62% ) Things have been quiet on the EURO front since the French Elections as we continue to consolidate. Will we see the EURO head lower or higher from here? We will discuss this in more detail in the MEMBER PORTAL . VOLATILITY ALERT: Quarterly Flash GDP and German ZEW Sentiment on Tuesday. For a sustained move higher we would now like to see the EURO hold above 1.0977. Should this occur the next level on the upside to watch is 1.1033. Should we see a break of this level we could then see a strong move to 1.1117; and if momentum is very strong we may see a move to 1.1201 before a pause. On the downside, if the EURO cannot remain above 1.0977 we will look for moves down into 1.0902 and 1.0887. A strong break and close below this level could then see this market trade at 1.0814; and if there is a complete reversal 1.0738 cannot be ruled out.
GBP/USD – 1.2885 ( -93 or -0.72% ) Like the EURO, Cable also continues to consolidate at our key 1.2867 level. As we move into the final month before the election, we will be watching the Pound closely this week for signs of a breakout. VOLATILITY ALERT: Annual CPI on Tuesday, Unemployment Rate on Wednesday, Retail Sales on Thursday. For a move to the upside we would like to see this market break above 1.3035. If the GBP can hold this level we will look for this market to head to 1.3227. Should we see a strong break through this level we could see the GBP/USD test 1.3426 very quickly. If momentum remains very strong, a move to 1.3644 cannot be ruled out. If we cannot break above 1.3035, we will look for a move back down to 1.2928. A strong break below this level could see a quick leg down into 1.2720. Should we break this level we will watch for a sharp move down to 1.2510; and if momentum is very strong 1.2297 cannot be ruled out.
USD/JPY – 113.34 ( +72 or +0.64% ) The $/YEN has now closed higher for the fourth consecutive straight week after coming into some resistance mid week. Whilst a move higher is still possible we will be watching for some short-term consolidation. VOLATILITY ALERT: Prelim Quarterly GDP on Thursday. For a continued move to the upside we must first see this market hold above our KEY level at 112.22. Should this occur we will look for a move back up to 114.52. A break above this level could likely see a retest of 115.54, and if momentum is strong we will look for a move higher into 116.08. If we cannot hold above 112.22, we will look for a move 111.73. A break below this level could result in a fast move down to 111.09, and if momentum to the downside is strong we may see a sharp move down into 110.10.
COMMODITIES GOLD – 1228 ( +1 or +0.08% ) GOLD was practically unchanged since last week and as such our levels remain the same. For a continued move higher we want to see this market hold above 1222, and break strongly through 1230. Should this occur we will look for a move higher back up to 1247. A break of this level could see GOLD rally higher back into 1257. If Gold cannot hold above 1222, we will look for a move lower into the very important 1206 level again. We will then need to see a strong break and close below this level for a move lower into the 1187-1181 area.
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