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 – 5205 ( – 14 or -0.27% ) Another volatile week on the ASX has seen it fail to break through our level of 5238, and we will be watching this level carefully this week.
NOTE: This is a short week due to Easter with most major markets closed on Friday. We expect volume to be thin going into Thursday but are prepared should large moves occur.
RBA Governor Stevens speaking. VOLATILITY ALERT: For a continued move higher we would like to see a strong break and close above 5238. Should we break this level we could see a move to 5294, a continued rally could see this move head to 5372 before a pause.If momentum remains strong we could see an extended move into 5403. If we fail to break 5238, we will be looking for a move back down to 5161; and a break below this could result in a move back into 5090. A strong break and close below 5090 could see a quick move back down to 4997, and a strong break and close below this level may result in a sharp move back down to 4921.
EUROPE DAX – 9942 ( +58 or +0.59% ) The DAX is now making an attempt to move higher however if we cannot break to the upside, we may see some sharp moves lower. We will be discussing this in our LIVE CHAT ROOM . For a continued move to the upside we would like to see a strong break and close above 10013. A close above this level will likely see the DAX push to 10131 and 10158; and if we continue to rally we will be watching for further moves to 10289 and 10382. If we fail to close above 10013, we will look for a move back down to 9907. A close below this level may result in a move down 9822 and should this level fail, we could see a move back down into to 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 ( +27 or +1.34% ) The S&P took positively to the FED’s announcement of only 2 interest rate hikes this year (vs. previously projected 4) and so the rally continues. We will be discussing potential outcomes of the FED’s stance in our MEMBER PORTAL .
For a move higher we would like to see a the S&P hold above 2040. Should this occur we will look for a move to 2054 before a pause. A break of 2054 may see a move into 2066 and if momentum remains strong we could see a quick move to 2079. If this rally really picks up steam we may also see 2097 before the week is over.
If however we close strongly below 2040, we may see a move back down to 2019. If momentum to the downside is strong we will look for a further move back down to 2002, and a strong break below this level may see a retest of 1990.
FOREX AUD/USD – 0.7602 ( +41 or 0.54% ) The Aussie dollar just pierced our 0.7662 levels before reversing for the week. This week could now prove to very pivotal for this rally. VOLATILITY ALERT: RBA Governor Stevens speaking. For a move higher we would like to see a break and close above 0.7662. This could then see the AUD make a move to 0.7729 before a pause. Should we break and close above 0.7729 we could see a very strong push up to 0.7833; and if momentum remains strong we will then be 0.7903. If the AUD cannot break above 0.7662 we will be watching for a move back down into 0.7561. A break and close below this level will likely see the AUD head for 0.7489, and a subsequent break of this level may result in a move back down to 0.7447 before a pause. Should momentum to the downside continue, we will watch for a move all the way back down to 0.7389.
EUR/USD – 1.1269 ( +122 or +1.09% ) Last week’s FOMC saw the EURO rally as the US dollar continues to sell-off. VOLATILITY ALERT: German Business Climate Survey on Tuesday.
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 – 1.4477 ( +94 or +0.65% ) A relatively positive budget has seen Cable try and claw back some of its losses this year; and is now again at some crucial levels. VOLATILITY ALERT: CPI on Tuesday, Retail sales on Thursday.
For a move to the upside we would like to see 1.4417 and 1.4469 hold as support, followed by a strong break and close above 1.4503. A break above this level could see cable quickly reach 1.4538, and if momentum remains strong we could see a push all the way up into 1.4630.
If we cannot hold above 1.4417, we could see a move back down to 1.4382. A break below this level could see the GBP head lower all the way back to 1.4223; and further breaks may result in a move down to 1.4194 before a pause. If momentum to the downside remains strong, we could see 1.4079 and 1.4039 before the week ends.
USD/JPY – 111.55 ( -226 or -1.99% ) The USD/JPY has been one of the most volatile pairs in the first quarter and this market is now in trouble of breaking lower. Seems like everytime Kuroda speaks the market falls lower, clearly they are not happy with him! We will be covering the USD/JPY in the LIVE CHAT ROOM this week in the event of some big moves.
NOTE: Monday is a Bank Holiday in Japan.
VOLATILITY ALERT: CPI on Friday.
For a continued move to the upside we would like to see 111.09 hold as support, followed by a break and close above 111.73. A break above this level could see the USD/JPY quickly head to 112.40, and should we continue to break higher we will look for further moves back up to 113.37 and 114.14.
If we cannot break 111.73, a break and close below 111.09 could see the USD/JPY head MUCH lower, and very quickly into 109.94. A break below 109.94 could again result in a sharp move down to 109.21; and if the USD/JPY continues on a downward move we may see 108.31 and 107.75.
COMMODITIES GOLD – 1255 ( +5 or +0.4% ) A volatile but relatively sideways week for Gold means our levels remain unchanged.
For a continued move higher we would like to see a break and close through 1258, followed by a strong break and close through 1276. Should this occur we could see a strong move to 1294, and a break of this level could see a move into 1303 before another pause. If momentum to the upside remains very strong we could see another blow-off type move into 1322.
If Gold cannot break above 1258 and 1276, we will look for a move back down to 1247. A strong break and close below this level we could see Gold trade back down to 1222; and additional breaks lower could see this market head back down to 1206.
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