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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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AUSTRALASIA
ASX – 4790 ( -105 or -2.15% )
The ASX was quiet for the majority of last week until Friday which saw a large range bar send the market to 4752, slightly breaching the September 2015 lows. Friday was a 200 point down day (-3.5%) and touched our FICM level of 4754 before closing a little higher.
For a new move to the upside we would like to see 4754 hold as support. If the ASX can hold this current level we could see an aggressive move into 4890. A break through 4890 could take us higher into 4921 and 4997. If a sharp snap back does take effect and the momentum is strong we may possibly extend to 5090 before the ASX slows down.
If however there is more downside to come, we may see a fast move down to 4702. A break below this level could result in another leg down to 4654 on its way to testing an important level of 4588.
EUROPE
DAX – 9476 ( -263 or -2.69% )
The DAX is now down -11.3% since the start of 2016 but unlike the ASX it did not breach the September lows.
For a move to the upside we would like to see 9386 hold as support or a break down through to 9322 followed by a strong break back up through 9386. Should this happen we could see a quick move to 9620 and if momentum is strong a snap back move to 10131.
If 9322 does not hold we could see the DAX move sharply lower, first to 9084 followed by a bigger move into the area between 8848 – 8890.
US
SP500 – 1884 ( -36 or -1.86% )
The S&P also sold off on Friday as poorer than expected Retail Sales numbers (particularly auto’s) added to the turmoil from China, and the market still pricing in the FED’s decision to raise rates.
NOTE: Monday is Martin Luther King day and a public holiday in the US.
For a move to the upside we would like to see 1854 hold as support, and should we continue higher from here we could see a quick move into 1910 and then into 1933. A strong break higher could send the S&P to 1945. Should we see a very strong move to the upside, 1990 is an area we will be discussing in our LIVE CHAT ROOM.
However if the S&P breaks down we could see moves to 1836 or 1817 before a pause. Should we break even lower, we could see a spike move down into 1782.
FOREX
AUD/USD – 0.6859 ( -92 or -1.32% )
The AUD tried to break through 70c on several occasions last week but failed as markets dissect what is coming out of China. We are carefully watching developments out of China in the event of a possible collapse to the downside (which would be negative for the AUD).
For a move to the upside we would like to see this market hold above the area between 0.6752 – 0.6795. If so we have levels higher at 0.6934 and 0.7016. Should the AUD manage to hold above 70c, a very strong break above 0.7016 may finally see 0.7113 before we slow down.
On the the downside a strong bar break & close through 0.6762 could quickly move the AUD lower to 0.6716. Below this we will be watching for potentially sharp moves down to 0.6570
EUR/USD – 1.0912 ( +13 or +0.12% )
The markets saw the EURO as somewhat of a safe haven amongst last week’s volatility, bucking the trend by closing higher (only just) and stronger than most other currencies. This week market’s will be eagerly awaiting the ECB press conference on Thursday night to see what Super Mario has to say.
For a sustained move higher we would like to see a strong break and close above 1.0977 on its way to retesting 1.1050. A break higher would likely result in a test of 1.1117, and if the upside remains strong we may see another push higher into 1.1256.
If we fail to break strongly above 1.09771 we will be watching 1.0817 to the downside. A break lower could see the EURO move back down to 1.0727. Below this we see the potential for a move all the way back down to 1.0521.
GBP/USD – 1.4254 ( -266 or -1.83% )
Cable has been on a tear to the downside in 2016 and as of Friday the GBP’s slide is now looking parabolic. We are again watching for a potential snapback in this market.
For a move to the upside we would like to see a very strong bar break AND close higher through 1.4382, with immediate follow through into 1.4469. If momentum remains strong to the upside we will be watching a move into 1.4635.
On the downside a break below 1.4223 could send the GBP lower to 1.4194 before a pause. If there is no stopping the downside move we could see continuation towards 1.40396.
USD/JPY – 116.985 ( -25 or -0.21% )
The USD/JPY is walking a tightrope. We are watching developments here closely should the USD/JPY form a LOW this week, otherwise we may potentially see higher volatile moves to the downside. We are at critical levels now and have begun to discuss this is more detail in our LIVE CHAT ROOM.
For a move to the upside we would like to see this market hold firm above 116.10 followed by a strong bar break and close above 117.49. Additional breaks higher could take us to 117.74 and 118.27. If the move is very strong 119.20 is also possible.
On the downside, should the USD/JPY break 116.32 WATCH OUT. This market could move to 116.04 in a heartbeat and continued selling pressure may result in a hard and fast move down to 115.5 with the potential of an extension towards 114.55. Below this things get very interesting.
COMMODITIES
GOLD – 1088 ( -92 or -1.43% )
After an initial move down on Monday GOLD spent the majority of last week going sideways.
For GOLD to continue higher we would like to see it hold above 1079 and break strongly through 1096. From here we will be be watching for potential moves to 1106, 1113 and 1118.
Should we break below 1079 we could quickly see a move down to 1058 and 1052. Further breakdowns below these levels may be sharp and see GOLD potentially trade to 1036 and 1025.
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