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 – 5320 ( +26 or +0.49% ) After a strong start to the week, we saw a strong reversal day on Wednesday with the ASX only managing to close 26 points higher for the week. We will be providing more analysis on this market in the MEMBER PORTAL . VOLATILITY ALERT: Unemployment Rate on Thursday.
For a continued move to the upside we would like to see this market hold above 5294. Should this occur we may see a continued rally could then see this move head to retest 5390. A break above this level could see the ASX test 5433, and if momentum remains very strong we could see extended moves into 5504 and 5521.
If we fail to hold above 5294, we will be looking for a move back down to 5238. A break below this could result in a move back into 5161, and further breaks to the downside could see the ASX head to 5090. If momentum remains very strong, a break and close below 5090 could see a quick move back down to 4997.
EUROPE DAX – 9885 ( -33 or -0.33% ) The DAX remained relatively flat for the week so our levels remain unchanged. NOTE: Monday is a bank holiday in Germany.
For a continued move to the upside we would like to see the DAX hold above above 9822, on its way to retesting 10013. A strong break and close above this level could see the DAX really take off- making fast moves to 10158; and if momentum remains strong we could see a quick move into 10337 and 10382 before a pause.
If we fail to hold above 9822, we will look for a move back down into the 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 would not be surprised to see a move back down to 9386.
US SP500 – 2047 ( -11 or -0.53% ) Like other equity markets, the S&P started off strong but finished off the week poorly. We are now watching this market closely for potential breaks lower, and will be discussing this in the LIVE CHAT ROOM . VOLATILITY ALERT: Building Permits, CPI on Tuesday, FOMC Minutes on Wednesday, G7 meetings from Friday – Saturday.
For a move higher we would like to see a the S&P first hold 2040, and then break above 2054. Should this occur we will look for a move to test 2076-2079 before a pause. A strong break above 2079 could see a very fast move to retest 2097, and if momentum remains strong we will look for an additional push into 2106 and 2112 again.
If we cannot hold above 2040, a strong break and close below this level could see a quick move back down above 2019. A break below this level may lead to a move down into 2002, and should momentum remain strong we could see a fast move back down into 1990.
FOREX AUD/USD – 0. 7267 ( -99 or -1.34% ) The $AUD continued its slide lower following the RBA’s rate cut. This market has now sold off aggressively for the past 3 weeks so we are expecting a pause/bounce very soon. VOLATILITY ALERT: Monetary Policy Minutes on Monday, Unemployment Rate on Thursday. For a move higher we would like to see the AUD hold above 0.7229, followed by a break and close above 0.7282. A strong break and close above this level could see a quick move to 0.7364 before a pause; and if momentum remains strong we will look for a move back up into 0.7447. If we cannot hold above 0.7229, we will look for a move back down to 0.7169. A strong break below this level may result in a move back down into 0.7112 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7070.
EUR/USD – 1.1306 ( -97 or -0.85% ) Like the $AUD the EURO was also lower last week given the strength we saw in the $US.
NOTE: Monday is a bank holiday in Germany, France.
VOLATILITY ALERT: ECB Monetary Policy Minutes on Thursday.
For a sustained move higher we would like to see a break and close above 1.1347, followed by a quick move to test 1.1385. A strong break and close above these levels could see the EURO head to 1.1435 and 1.1496 before a pause. Should we break through 1.1496, we could see a very strong move to test 1.1613.
On the downside, a break and close below 1.1248 could result in a move back down to 1.1201. Should the EURO continue to taper off, a break below this level may result in a quick moves down to 1.1163 and 1.1117 before a pause. If 1.1117 is broken, we will look for the EURO to move back down to 1.1033 and 1.0977.
GBP/USD – 1.4357 ( -72 or -0.5% ) Last week’s BoE rate decision for the most part proved to be uneventful (as expected), but we are now watching cable very closely. VOLATILITY ALERT: Annual CPI on Tuesday, Unemployment on Wednesday, Retail Sales on Thursday.
For a move to the upside we would like to see a strong break through 1.4469. A break and close above this level may likely result in a move to 1.4589 before a pause. If momentum remains strong, we will look for moves into 1.4630 and 1.4748. Should we break strongly above 1.4748, we will not rule out a move into 1.4896 by the end of the week.
If we cannot hold above 1.4382, we will look for moves down into 1.4262 and 1.4194. Further breaks below this level may likely see a move down into 1.4041 and 1.4006. If momentum to the downside persists, we could see a strong move down into 1.3937, and should this downside momentum continue we will look for a final move into 1.3853.
USD/JPY – 108.64 ( +154 or +1.44% ) We have been speaking about the USD/JPY for many weeks alerting to big moves higher. We are still keeping a close eye on this pair as the BoJ has been relatively quiet for a few weeks now. We will be discussing this market exclusively in our LIVE CHAT ROOM . VOLATILITY ALERT: Quarterly GDP on Wednesday.
For a continued move to the upside we would like to see the market hold above 108.31. Should this occur we will then be looking for a move into 109.21. A strong break and close above 109.21 could see a quick move into 109.94 and if a V-bottom reversal takes shape, we could see a strong move all the way back up to 111.09.
If however the USD/JPY cannot hold above 108.31, we will look for a move down to 107.75. A break below this level could see the USD/JPY trade quickly down to 106.30 again before a potential pause. Should we break below this level we could see continued downside pressure for the USD/JPY and quickly see moves into 105.36 and 104.97.
COMMODITIES GOLD – 1273 ( -15 or -1.16% ) GOLD also remained relatively unchanged last week, having drifted slightly lower.
For a continued move higher we would like to see a close above 1276, followed by a break and close through 1294. Should this occur we could then see a move into 1303, and a break of this level could see a strong move into 1322.
If Gold cannot break above 1276, we will look for a move back down to 1258. A strong break and close below this level we could see Gold trade back down to 1247, and if momentum to the downside remains strong we will watch for another move down to 1226 before the end of the week.
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