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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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UPCOMING EVENTS
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JUNE 2016 – 2 SEATS LEFT
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INDICES
AUSTRALASIA
ASX – 5351 ( +31 or +0.58% )
The ASX has been crawling slightly higher for the past few weeks and last week was no exception. After a strong start to the week, we saw a lot of choppy action. Is this the week we finally break out?
We will be providing more analysis on this market in the MEMBER PORTAL.
VOLATILITY ALERT: RBA Governor Stevens speaks on Tuesday, Private CapEx on Thursday.
For a continued move to the upside we would like to see this market hold above 5294. Should this occur we may see a continued rally could then see this move head to retest 5390. A break above this level could see the ASX test 5437, and if momentum remains very strong we could see extended moves into 5504 and 5521.
If we fail to hold above 5294, we will be looking for a move back down to 5238. A break below this could result in a move back into 5161, and further breaks to the downside could see the ASX head to 5090. If momentum remains very strong, a break and close below 5090 could see a quick move back down to 4997.
EUROPE
DAX – 9919 ( +34 or +0.34% )
The DAX has also remained relatively flat and we are watching this market closely for potential breakout. Our levels remain unchanged.
VOLATILITY ALERT: German Flash Manufacturing PMI on Monday, ZEW Economic Sentiment on Tuesday, Ifo Business Climate on Wednesday.
For a continued move to the upside we would like to see the DAX hold above above 9822, on its way to retesting 10013. A strong break and close above this level could see the DAX really take off- making fast moves to 10158; and if momentum remains strong we could see a quick move into 10337 and 10382 before a pause.
If we fail to hold above 9822, we will look for a move back down into the 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 – 2052 ( +5 or +0.24% )
Like other equity markets, the S&P also finished off the week flat; but more importantly we are now watching the 2040 level very closely.
We will be discussing this market in more depth in the LIVE CHAT ROOM.
VOLATILITY ALERT: New Home Sales on Tuesday, Prelim Quarterly GDP on Friday, Fed Chair Yellen speaks on Friday.
For a move higher we would like to see a the S&P first hold 2040, and then break above 2054. Should this occur we will look for a move to test 2076-2079 before a pause. A strong break above 2079 could see a very fast move to retest 2097, and if momentum remains strong we will look for an additional push into 2106 and 2112 again.
If we cannot hold above 2040, a strong break and close below this level could see a quick move back down above 2019. A break below this level may lead to a move down into 2002, and should momentum remain strong we could see a fast move back down into 1990.
FOREX
AUD/USD – 0.7223 ( -44 or -0.61% )
Last week we saw weaker than expected Unemployment numbers and the AUD continued its move lower. This move is now overextended and we may see this move come to a pause this week.
VOLATILITY ALERT: RBA Governor Stevens speaks on Tuesday, Private CapEx on Thursday.
For a move higher we would like to see the AUD break above 0.7229, followed by a break and close above 0.7282. A strong break and close above this level could see a quick move to 0.7364 before a pause; and if momentum remains strong we will look for a move back up into 0.7447.
If we cannot hold above 0.7229, we will look for a move back down to 0.7169. A strong break below this level may result in a move back down into 0.7112 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7070.
EUR/USD – 1.1213 ( -93 or -0.82% )
Like the $AUD the EURO was also lower last week given the strength we saw in the $US.
VOLATILITY ALERT: French and German Flash PMI on Monday, ZEW Economic Sentiment on Tuesday, Eurogroup meetings on Tuesday, German Ifo Business Climate, ECOFIN Meetings on Wednesday.
For a sustained move higher we would like to see a break and close above 1.1249, followed by a quick move to test 1.1347. A strong break and close above these levels could see the EURO head to 1.1385. Should we break this level we could see a quick move to 1.1435 and 1.1496 before a pause. If momentum remains very strong and we break and close above 1.1496, we could see a final push to test 1.1613.
On the downside, should we hold below 1.1248 we may see a move back down to 1.1201. Should the EURO continue to taper off, a break below this level may result in 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 – 1.4504 ( +147 or +1.02% )
The GBPUSD is heating up as we enter the final week of May, the last month before next month’s Brexit referendum.
VOLATILITY ALERT: Prelim quarterly Business Investment on Thursday.
For a move to the upside we would like to see a the GBP hold above 1.4469. If we can hold above this level we will look for a move to 1.4589 before a pause. If momentum remains strong, we will look for moves into 1.4630 and 1.4748. Should we break strongly above 1.4748, we will not rule out a move into 1.4896 by the end of the week.
If we cannot hold above 1.4469, we will look for moves down into 1.4382. A break and close below this level may result into a move down to 1.4262 and 1.4194. Further breaks below these levels may likely see strong moves down into 1.4041 and 1.4006. Should momentum to the downside persist, we could see a strong move down into 1.3937.
USD/JPY – 110.17 ( +152 or +1.4% )
The YEN pairs have all but faded the previous move down and clients of our Member Portal have seen some fantastic trades, in depth analysis, and discussion on these pairs over the past few weeks. Over the weekend we saw the US and Japanese clash on current YEN policy. Could the US have something to say about what levers Kuroda has to pull?
We will again be discussing this market, and other YEN pairs in our LIVE CHAT ROOM.
VOLATILITY ALERT: Quarterly GDP on Wednesday.
For a continued move to the upside we would like to see the market hold above 108.31. Should this occur we will then be looking for a move into 109.21. A strong break and close above 109.21 could see a quick move into 109.94 and if a V-bottom reversal takes shape, we could see a strong move all the way back up to 111.09.
If however the USD/JPY cannot hold above 108.31, we will look for a move down to 107.75. A break below this level could see the USD/JPY trade quickly down to 106.30 again before a potential pause. Should we break below this level we could see continued downside pressure for the USD/JPY and quickly see moves into 105.36 and 104.97.
COMMODITIES
GOLD – 1252 ( -21 or -1.65% )
GOLD is down for the third straight week, once again on the back of strength in the US Dollar. Will we see another down week this week, or is a bounce due?
For a continued move higher we would like to see GOLD hold above 1247, followed by a break above 1257. A break and close above this level could see Gold trade to 1276, and should we break strongly through this level we will look for a move to 1294. If momentum remains very strong we cannot rule out a move back up into 1303 this week.
If Gold cannot break above 1247, we will look for a move back down to 1226 and 1221. If momentum remains strong, a break and close below this level could see Gold trade back down to 1206.
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