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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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AUSTRALASIA ASX – 5308 The ASX started the week trying to push higher but was stopped on one of our FICM levels of 5366. Once it reached this it fell back down to close only 3 points lower. Therefore our comments remain the same as last week.
For the up move to restart we would like to see a strong push up from current levels towards 5366. Once this level is reached we need to see a long up bar break and close above 5366 before we could see 5408. If the upward momentum continues strong then 5423 could be reached. If we are to see 5423 broken then we would like to see strong long up bars before a new attempt at 5483 can be made.
If the down move was the start of a longer more prolonged move then we would like to see an early break past 5270 reaching 5200. Once this is achieved we would like to see a solid break through this level continuing towards 5144. The test for the ASX will then come between 5125 and 5094. If this area does not provide support then we could see further downside moves.
EUROPE FTSE – 6517
The FTSE moved higher early in the week reaching a high of 6680, but then fell back down to close only 1 point higher. Therefore our comments remain the same as last week.
For the FTSE to have any chance of a new upmove forming then we would like to see 6563 broken early in the week followed by a strong push towards 6628. Once this level is reached we would like to see a solid break and close above 6628 with a long up bar. This could then lead it to reach 6657. If the momentum continues strong then 6740 could once again be reached.
For the down move to continue then we would like to see an early break past 6498. Once this occurs then we will be paying attention to the area between 6433 – 6395. If the downward momentum is strong and we see a break past this area we could reach 6358 and possibly an ambitious extension towards 6225 could be achieved. If the momentum slows down near 6433 – 6395 then the FTSE could find temporary support.
DAX – 9280
The DAX once again provided a lead for the markets as it continued higher early in the week. Unlike the previous week were the DAX bounced off the lows to close 115 points higher, last week we saw the DAX reach a high of 9378 (9377 resistance was mentioned in last weeks brief) it fell back down to close 100 points from its highs. Again, could this then provide guidance for this week?
If we are to see a continuation of the up move then we would like see a solid start to the week with breaks past 9377, 9431 and 9509. If these levels are broken with solid momentum then we could see 9617 reached.
If the down move restarts based on Fridays move then we would like to see an early break past 9222 followed by another strong move past 9113 before it reaches 9000 again. If the momentum slows down near 9000 we could see a slight extension down to 8960.
US S&P – 1866
The S&P seems to be ignoring all fundamental data and moved higher once again making another attempt at breaking the all time high of 1888 by reaching 1884 to then fall back down by 18 points.
There are 2 chains of thought:
“Stock markets can stay irrational longer than you can stay solvent” and
“Technical breaks need to be followed up by fundamentals”.
We find the second chart of most interest: ENJOY:
This will be monitored carefully as we believe an opportunity is just around the corner.
For the S&P to move higher we would like to see a strong break past the all time highs of 1888.If this occurs we will discuss in our
If we continue to see weakening data and the markets follow, a break and close below 1856 could start a down move. Once this occurs then we would like to see 1837 broken early reaching 1805.
FOREX AUD.USD – 9076
Once again the AUD finds itself in no mans land as it moved in a 150 point range to then settle only 47 points higher. Therefore our comments remain the same with a slight amendment on the downside.
For the upmove to continue and the new trend takes effect we would like to see a strong early break past 9134 followed by a break past 9182. This could then lead the pair to reach 9289. If the momentum continues then 9373 could be reached.
If the AUD restarts the longer term down move again then we would like to see 9012 broken early in the week which could then lead the pair towards 8924. If we see a strong long down bar through 8924 then we could see 8873 where it might find some temporary support.
EUR.USD – 13793
Another slow start for the week but then Janet Yellen indicates a possible rate rise in the US and then it goes down 150 points. If Mario Draghi is serious about curbing the EUR then maybe now is the time for him to step in and help it on its way? Could this be the momentum shift we discussed previously?
For the up move to restart then we would like to see an early break past 13858 followed by a strong momentum break and close through both 13938 – 13966 area with a long up bar. Once this occurs then we could see 14024.
For the EUR to move back down we would like to see a strong early break past 13685-48 before we see 13515. If the downward momentum is strong and we see another long bar break past 13515 then we could see temporary support near 13432 – 13397.
GBP.USD – 16485
Another leg lower for the GBP as it seems that its overextensions throughout late 2013 and early 21014 are behind us (for now). As mentioned previously this pair will be monitoring closely for any sharp moves.
If the GBP restarts a move higher then we would like to see a break and close back through 16537 with a long up bar which could lead the pair to reach 16599. Once this level is also broken then 16633 needs to be broken with strong momentum before we can see 16686.
If 16537 provides a solid level of resistance and the downward move continues, then we would like to see 16443 broken early in the week before reaching 16338. Once this is reached we would like to see a long down bar break 16338 before potentially settling near 16295. If the GBP does not find support here then 16070 could be reached.
USD.JPY – 10227
Another equity market rally, another USD rally against the YEN. Oh, also Janet Yellen helped by indicating a rate rise. We mentioned last week that “It is now obvious that the JPY is the safe haven play”, lets see how this plays out if the equity markets fall away. It might be a confusing time for the markets as potential Interest rate rise should be strong for the USD, but if the markets fall then does the JPY take over again?
If the USD continues its strength then we would like to see a strong break past 10243 followed by a momentum break with a long up bar through 10309. Once this occurs then we could see 10345. If the momentum is strong then an extension towards 10429 is possible.
If 10243 proves to be a difficult level to break above then a move down could be seen if 10186 is broken reaching 10152. Once this level is also broken then we could see the pair near 10078 – 52.
COMMODITIES GOLD – 1334
As equity markets rose we saw GOLD go down. Are we now starting to see some normality in the markets? The only thing left for the equity markets is:
Bad News is Bad News and Good News is Good News.
For GOLD to restart the move higher we would like to see an early break and close past the area between 1349-56 with a long up bar. Once this occurs we could see 1391-93 (FICM) area again. This level was a strong resistance in the past and could prove difficult to break again. This will be closely monitored.
If we see a continuation of the down move then we would like to see and early break past 1310 which could lead it back down to 1299. The move down could be short lived as GOLD could find support near 1269 – 82 area.
US LIGHT CRUDE OIL – 99.50
Last week we saw a sideways ranging move for OIL which then closed only 48 points higher. As it is still with our range our comments remain the same as last week with slight mathematical changes.
If OIL stays above 99.33 and moves higher early in the week this could then lead the commodity to reach 100.43 followed by 101.19-28. If the momentum continues strong then we could see 102.94-98 again.
For a down move to restart then 99.33 needs to broken again and become a solid level of resistance and a move back down past 97.41 would restart the downward process. Once this occurs then 96.95 would need to be broken before it could test 95.98. If the downward momentum continues strong then 94.54 and 93.46 will be monitored closely as this would complete the range.
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