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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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We may take multiple trades throughout the week. Currently Trade View is light Net Short.
ASX – 5204
The ASX is in a potential slowdown phase where the current move of approx 350 points is taking a breather. The one thing to note, is that it reached a high of 5250 which was slightly above a short term resistance point of 5236 and has come back down to the 5200 area.
For this upmove to continue we need to see 5236 broken with real strength and 5301 reached within the same move. Once this is achieved we will be looking for 5445 as our medium term target.
If 5236 and 5301 prove to be difficult to break then a break below 5195 could see 5126 reached and tested depending on the forcefulness of the down move. If we break below 5126 then we will be looking for 5006.
FTSE – 6742
The current FTSE move shows no sign of slowing down, however we remain cautious of potential downside of a reversal. It has also closed around 50 points from our short term target of 6796 that we mentioned last week.
For the current up move to continue up, we would like to see other markets continue their rises as well and for 6796 to be broken early this week before making an attempt at 7212.
If this vertical up move cannot pass through 6796 and takes a turn back down, then if we see a solid break below 6647 then 6478 in the short term.
DAX – 8445
The DAX has continued its upwards trend but not with the same strength as previous weeks.
Although it finished the week on a strong bar it fell short of last week’s target of 8670 which would have completed the strength of the move.
If the vertical up move is to continue, it needs to do so with strength and break through 8670. This would require a 200+ point rally within a few days, which in this market is not impossible, but perhaps achievable with more stimulus.
If this doesn’t occur, then a solid break below 8351 could see 8262 in the short term, then if 8262 is broken with momentum then we could see 8003 reached.
S&P – 1665
The S&P has indeed broken through 1637 to reach our last week’s target of 1660 before closing at current levels.
This week could see the same up moves, as the USDJPY has made strong moves past 103 and the US Treasuries are approximately 500 points below their peak at the start of May. If this move continues up, then 1660 needs to become support and create a platform for a bounce towards 1718.
If 1660 does not hold and we see strong moves down, then 1645 looks like a potential support level, but if it does not hold then we could see 1633 become a stronger support level.
Note: US Treasuries were below 144 before rallying into Friday and closing above 145 in line with the S&P rally. We will be watching for further rallies in Treasuries and a slowdown in the S&P moves for any signs of a potential corrective move in the markets.
NASDAQ – 3023
The NASDAQ continued its up move from the previous week with a strong finish to the week with a high of 3027, which was only 17 points short of our short term target of 3044 that we mentioned last week.
For an upmove to continue we would like to see 3044 broken early and continue into the week with strength before we see 3092.
On the other hand if 3044 proves to be difficult to break then a solid break below 3009 could see 2961 reached.
AUD.USD – 9726
The AUD found itself in a freefall phase during the week and just did not want to stop.
The current down move has been strong, and if it is to take a breather, we should see our target of 9621 reached. If this level is broken then the next target could be 9540 followed by 9360.
If the AUD finds support at 9621, then a bounce could be short lived and find resistance at 9860.
EUR.USD – 12837
The EUR decided to break 12927 on the downside before reaching our target of 12814 with a low of 12796.
If the current down move is to continue then we would like to see 12814 broken again with strength before a short term target of 12771 could be reached. And if this is broken with strength then 12694 is possible.
For an upmove to play out from a bounce off 12814 then 12903 and 12927 need to be broken with strong momentum before a target of 12974 is reached.
GBP.USD – 15168
The GBP’s down move last week was strong, and it reached our target of 15184 before closing 16 points lower.
FICM is now indicating a potential slowdown in this move and this would only occur if 15184 becomes a support level. So an early above 15184 could create a potential upmove towards 15257 and seeing 15342 reached.
If 15184 acts as resistance and the USD continues its strength, then an ambitious target of 14394 could play out on the downside.
USD.JPY – 10318
Last week we mentioned that we would not attempt a target on the upside and this week we are standing by this.
The JPY has been given the green light to go down so hold on tight and enjoy the ride.
Even though there are no signs of a slowdown in the upmove, any short term break below 10282 could see 10254 and possibly 10210 reached.
GOLD – 1359
GOLD made its move down last week with real momentum and is now only 40 points away from April’s low of 1321.
If we are to see the April low taken out, the freefall could continue as many traders who are long might get out of their trades and push the commodity even lower. As mentioned last week, if this plays out then no attempt on targets will be made.
If GOLD is to stand a chance of any move up then it would need to break above 1372 and hold that level before attempting a move towards 1398.
US LIGHT CRUDE OIL – 9628
LIGHT CRUDE is trading nicely between some of our levels at the moment, and we have seen it bounce off 9346 which was our downside target and our potential resistance on the upside of 9659.
If this upward move is to continue then we would like to see 9582 hold before 9744 is reached. If 9744 is broken early in the week with momentum we might actually see 9947 reached.
If the break below 9582 occurs then 9346 again.
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