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 – 5923 ( +72 or +1.23% ) The ASX finished the week higher as we now test the key 5921 level again. VOLATILITY ALERT: RBA Interest Rate on Tuesday , Trade Balance on Thursday, Monetary Policy Statement on Friday. For a continued move higher we must now see the ASX hold 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 hold 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 – 12431 ( +346 or +2.86% ) After a very strong gap to the upside on Monday’s French Election results the DAX spent all week consolidating its gains.Will we see this market breakout to the upside this week after consolidating Monday’s gap, or a fade back down? We will be discussing this market in the LIVE CHAT ROOM this week. VOLATILITY ALERT: Prelim Flash GDP on Wednesday. NOTE: Monday is a public holiday across Europe (Labour Day) For a continued move to the upside we must see the DAX hold above 12381 . Should this occur a break and close back above 12404 could see a quick move to the very key level at 12485. If we can break above this level we will then be targeting a move to 12714. If the DAX fails to hold above 12381, we will look for a move back down to 12198. A strong break below this level is likely to see a push further down into 12044, and if downside pressure is strong this week a sharp move down to 11875 cannot be ruled out.
US SP500 – 2384 ( +34 or +1.45% ) The S&P continues to trade within a short term sideways consolidation and range. We have yet to break out to the upside and are at a very key double top area. Will the S&P break to new highs this week? VOLATILITY ALERT: ISM Manufacturing PMI on Monday, FOMC on Wednesday , NFP on Friday. We will be covering the FOMC Interest Rate Announcement and NFP LIVE in LiveTV this week. For a move higher we must continue to see the S&P hold above our key level of 2376 level. Should this hold we will look for another move to 2386, and further breaks to the upside could see a retest of 2400. Should we see continued upside, we will look for a move to 2412 and 2417. If we cannot hold above 2376, we will look for a move down to 2360. A close below this level could see further downside to 2334, and if momentum remains strong we may see a fast move down to 2312.
FOREX AUD/USD – 0.7487 ( -57 or -0.76% ) The AUD continues to bounce in and out of our levels. Last week we mentioned key support 0.7489 and 0.7447 and we saw the market respect these levels. VOLATILITY ALERT: Quarterly CPI on Wednesday. For a move higher we would like to see this market now break and close above 0.7489. Should this occur we will look for a retest of 0.7561. A strong break and close above this key level could then see this market rally to 0.7617 before a pause. If we cannot close above 0.7561, we will look for a retest of the key 0.7489 support area first. A close below 0.7489 may then result in a move down to 0.7447. Should we break strongly through this level, we cannot rule out a sharp move down to 0.7364 by the end of this week.
EUR/USD – 1.0898 ( +175 or +1.63% ) Like the DAX the EURO spent last week consolidating its gains higher. We will be discussing this market extensively in the MEMBER PORTAL this week. VOLATILITY ALERT: Prelim Flash GDP on Wednesday. NOTE: Monday is a public holiday across Europe (Labour Day) As this market has gapped substantially to the upside, we will now look for the EURO to hold above the key 1.0977 level this week. Should this occur, we anticipate 1.1054 may come into play and if the EURO can break and close above this level a move to 1.1123 cannot be ruled out. Given this market has gapped substantially to the upside in pre-market trade, we will now be watching key levels for a potential fade down to 1.0902, 1.0814 and finally a potential full fade to 1.0738.
GBP/USD – 1.2945 ( +142 or +1.11% ) The GBP continues to rally following the snap British election and we have stated in our MEMBERS AREA that would be near-term bullish for the Pound. VOLATILITY ALERT: Manufacturing PMI on Tuesday, Construction PMI on Wednesday, Services PMI on Thursday. NOTE: Monday is a public holiday in the UK (May Day) For a move to the upside we would like to this market hold above 1.2868. Should this occur we will look for a retest of 1.3035, and if momentum remains very strong we cannot rule out a move to 1.3249. If the GBP cannot hold above 1.2868, we will look for a move back down to 1.2821 and 1.2720. A close below this level could result in a strong move back down to 1.2571.
USD/JPY – 111.51 ( +252 or +2.31% ) The $/YEN is now at a major area of support and if it can hold here we may see a multi-week rally. However should we break lower WATCH OUT! We will be discussing this in the LIVE CHAT ROOM this week. VOLATILITY ALERT: BoJ Monetary Policy Rate and Statement on Thursday , Household Spending on Friday. NOTE: Japanese markets are closed Wednesday – Friday due to various holidays For a move to the upside we will look for this market to hold above our key level at 111.09, followed by a strong break and close above 111.73. Should this occur we will look for a move back up to 112.22 before a pause. If momentum remains strong to the upside, we may see a very strong move to 113.87 – 114.08 before the week’s end. If we cannot hold above 111.09, the YEN may see further downside into 110.10. A strong break and close below this level could spell trouble for the YEN, with a very fast move down to 109.94, and further downside could see this market sell-off back down to 109.21. COMMODITIES GOLD – 1268 ( -16 or -1.25% ) Like $/YEN, GOLD is also at a very ker area, having consolidated all week in a very tight range. We are near a very key area (1276 – 1278) and will be watching these levels closely this week. For a continued move higher we would like to see this market hold above 1278, followed by a retest of 1294. A strong break above 1294 could see this market head back up to 1303, and if momentum remains strong we could see a move into 1313 before another pause. If Gold cannot hold above 1278, we will look for a strong move back down into 1263 and 1257. A break and close below this level could then result in a move to 1247 before the week’s end.
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