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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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INDICES
AUSTRALASIA
ASX – 5576 ( +66 or +1.2% )
The ASX has pushed through our key levels between 5535 – 5541 and is poised for a potential move higher; but keep in mind we have the all-important interest rate announcement this week.
We will be discussing this market in more detail in the LIVE CHAT ROOM this week.
NOTE: Monday is a Bank Holiday in NSW.
VOLATILITY ALERT: Trade Balance and Interest Rate Announcement on Tuesday, Retail Sales on Thursday
For a continued move to the upside we would like to see this market hold above 5521. Should this occur, we will look for a move higher into 5589. A strong close above this level may see the ASX rally to 5651 by the end of the week.
If we fail to hold above 5521, we will look for a move back down to 5437. A break below this could result in a move back down into 5373. Further breaks to the downside could see the ASX fall aggressively back down to 5294 and the important 5248-5238 area.
EUROPE
DAX – 10350 ( +201 or +1.98% )
The DAX had a stellar recovery in July following the large sell-off in June, and we have completed the fade of the BREXIT sell-off. With little data this week it will be interesting to see note what the sentiment in this market is.
VOLATILITY ALERT: Monthly German Factory Orders on Friday.
For a continued move to the upside we would like to see the DAX hold above above 10289 and ideally 10382. If so we could see the DAX really take off- making fast moves to 10585 – 10601 before a pause. If momentum is VERY strong we would not rule out an explosive move to 10863.
If we fail to hold above 10289, we will look for a move back down to 10158. A close below this level may result in a move down 10013 and should this level fail, we could see a move back down into to 9907. A strong break below this level could see the DAX trade all the way back down to 9822; and if momentum remains strong we would not be surprised to see a move back down to 9620.
US
SP500 – 2176 ( +3 or +0.14% )
The S&P closed right at our 2176 level last week and we are again watching closely for this market very closely to break higher and make new all-time highs. This week we enter the heaviest week of earnings season so expect more volatility, in addition to NFP on Friday.
We will be discussing this market in more depth in the MEMBER PORTAL and covering the NFP numbers LIVE during LIVE TV.
VOLATILITY ALERT: ISM PMI on Monday, ADP and ISM Non-Manufacturing PMI on Wednesday, Non-Farm Payroll on Friday.
For a move higher we must now see the S&P break above 2176, it’s that simple! Should this occur we will look for a move into 2194. A strong break and close above 2194 is likely to see the S&P set its sights for 2200. If we can hold above 2200 this week, we will ultimately then look for a move to 2234.
If we cannot break above 2176, we will watch for this market to hold 2150. A break below 2150 may see this market retest the previous all-time highs at 2137. A strong break through 2137 could result in a move back down to 2126, and should we break 2126 we cannot rule out a move back down into 2112 by the end of the week.
FOREX
AUD/USD – 0.7598 ( +139 or +1.86% )
The AUD was stronger last week as the market rallies into the RBA’s all-important interest rate announcement on Tuesday.
We will be discussing this market in more depth in the MEMBER PORTAL.
VOLATILITY ALERT: Trade Balance and Interest Rate Announcement on Tuesday, Retail Sales on Thursday.
For a move higher we would like to see the AUD hold above 0.7561, followed by a break and close above 0.7617. A strong break and close above this level could then see a quick move to 0.7662 before a pause; and if momentum remains strong we will look for strong move into 0.7729.
If we cannot hold above 0.7561, we will look for a move back down to 0.7447. A strong break below this level may result in a move back down into 0.7364 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7282.
EUR/USD – 1.1168 ( +193 or +1.76% )
The EURO rallied strongly last week as weakness in the $USD saw many currencies strengthen. This market is now at a very key level.
VOLATILITY ALERT: Monthly German Factory Orders on Friday.
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.
GBP/USD – 1.3222 ( +112 or +0.85% )
Volatility in the GBP was muted last week and this market is range bound between 1.3309 – 1.3050. Markets will be watching what BoE Governor Mark Carney says this week. Will we see the GBP cut rates for the first time in 7 years?
We will be discussing this market in more depth in the MEMBER PORTAL and covering the BoE Interest Rate announcement LIVE during LIVE TV and covering the NFP numbers LIVE during LIVE TV.
VOLATILITY ALERT: Manufacturing PMI on Monday, Construction PMI on Tuesday, Services PMI on Wednesday, BoE Interest Rate on Thursday.
For a move to the upside we would like to see this market break and close above 1.3227. A break above this level could see the market retest to 1.3426. Should we see a strong break through this level we will look for a quick move to retest 1.3495, and if momentum remains very strong a push to 1.3644 cannot be ruled out.
If we cannot break above 1.3227, we will look for a move back down to 1.3035. A strong break below this level could see a quick leg down into 1.2928. Should we break this level we will watch for a sharp move down to 1.2869; and if momentum is very strong a retest of the low at 1.2798 cannot be ruled out.
USD/JPY – 102.05 ( -394 or -3.72% )
Last week we saw Abe announce more stimulus- but this time in the form of buying ETF’s. The market did NOT like it and back down we went. Expect more volatility this week.
We will be discussing this market again this week in our MEMBER PORTAL and during LIVE TV.
For a continued move to the upside we would like to see this market break above 102.29, followed by a break and close above 103.21. Should this occur we will look for move into 103.99. A strong break above 103.99 could see a move to 104.97, and if momentum remains strong we cannot rule out a sharp move higher to 106.30.
If however the USD/JPY cannot break above 102.29, we will look for a move down to 101.12 and 100.76 – 100.61. A strong break below these levels could see the USD/JPY trade quickly down to 99.90 before a pause. Should we continue to trade lower and see continued downside pressure on the USD/JPY- a sharp move to 98.22 is possible.
COMMODITIES
GOLD – 1351 ( +29 or +2.19% )
Gold drifted lower last week and there is pressure in this market to move higher given the continued strength in risk assets.
For a continued move higher we would like to see GOLD hold above 1333, followed by a strong break and close above 1355. Should this occur we could see a move to retest 1375, and a strong break and close above this level could see a fast spike to 1380.
If Gold cannot hold above 1333, we will look for a move back down to 1322. A break below this level may see GOLD trade down to 1309 -1303. Should momentum on the downside remain strong, we could see Gold trade all the way back down to 1297.
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