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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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INDICES
AUSTRALASIA
ASX – 5416 ( -14 or -0.26% )
For the second straight week the ASX has struggled to move anywhere.
Last week we stated “we will continue to look for our levels” and once again they have proved quite accurate.
This week we look for a potential breakout one way or another..
VOLATILITY ALERT: Quarterly CPI on Wednesday, Quarterly PPI on Friday.
For a continued move to the upside we would like to see this market close above 5437. If this were to happen, we could see a move into 5504 and 5521. A strong break above these levels could see a move to retest the all important 5550 level, and if momentum remains very strong we could see the ASX rally to 5664 by the end of the week.
If we fail to close above 5437, we will look for a move back down to 5373. A break below this could result in a move back into 5294, and further breaks to the downside could see the ASX head to 5238. If we see a complete reversal to the downside, we will watch 5161 as a potential area of support.
EUROPE
DAX – 10716 ( +127 or +1.2% )
The DAX has closed above our key level of 10585, and we will now look for this market to test higher levels should it remain above the key 10585.
Last week we covered the DAX LIVE in our Live TV and took some very quick profits, not to mention called the high of the week at exactly 10749!
VOLATILITY ALERT: Flash Manufacturing PMI on Monday, Draghi speaks on Wednesday.
For a continued move to the upside we would like to see the DAX hold above above 10585 – 10601, followed by a break above 10749. Should this occur, we may see another push higher into 10863. Further breaks of this level could see the DAX rally 10983 and if the move is very strong, 11060 cannot be ruled out.
If we fail to hold above 10601, we will look for a move back down to 10475 and should there be further downside, we could see a move lower to 10382. Should momentum remain very strong, we will look for a move down to 10158.
US
SP500 – 2140 ( +7 or +0.33% )
Like other indices the S&P remained in a very tight range last week. We have been covering this market extensively in our MEMBER PORTAL and will look at this market again in more detail this week.
VOLATILITY ALERT: Consumer Confidence on Tuesday, Durable Goods Orders on Thursday, Quarterly (Advance) GDP on Friday.
For a move higher we must now see the S&P break hold above 2137. A strong close above this level could see a retest of 2160, and further breaks to the upside may see a strong move to 2176 before a pause. Should we break 2176 we will look for a move back up into the all-time highs at 2194. If this market breaks and closes above 2194, we cannot rule out a move to 2212 by the end of the week.
If we cannot hold above 2137, we will look for a move back down to 2126. A break and close through 2126 may result in a retest of 2112, with the potential for a quick spike down to 2108. Last week we stated should we break 2108 then watch out. Our comments remain the same this week.
FOREX
AUD/USD – 0.7604 ( -11 or -0.14% )
In a move opposite to the week prior- the Aussie dollar rallied strongly at the beginning of last week into our 0.7729 level, only to get sell off very heavily from this level.
VOLATILITY ALERT: Quarterly CPI on Wednesday, Quarterly PPI on Friday.
For a move higher we would like to see the AUD close above 0.7617, followed by a strong break and close above the 0.7662 – 0.7683 region. A strong break and close above these levels could then see a quick move to 0.7729 before a pause; and if momentum remains strong we will look for strong move into 0.7789.
If we cannot close above 0.7617, we will look for a move back down to 0.7561. A strong break below this level may result in a move back down into 0.7447, and further breaks lower could see 0.7364 before another potential pause. If momentum remains strong, a break and close below 0.7364 could see a sharp move down to 0.7282.
EUR/USD – 1.0882 ( -90 or -0.82% )
The EURO continued its slide last week following Draghi’s comments.
We will be discussing this market in more depth in the LIVE CHAT ROOM this week as to what is the most likely course of action going forward.
VOLATILITY ALERT: Flash Manufacturing PMI on Monday, Draghi speaks on Wednesday, M3 Money Supply on Thursday.
For a sustained move higher we would now like to see a strong break and close above 1.0902. Above this we have the key area between 1.0977 – 1.1000, and a strong break and close through 1.1033 may likely see a retest of 1.1117.
If we cannot break above 1.0902, we will likely see continued chop back and forth between 1.902 – 1.0804. A strong bar break below 1.0804 could see a fast move down into 1.0727 – 1.0701 before a pause. Further breaks below 1.0701 would allow for a move to 1.0635 and potentially a retest of 1.0521.
GBP/USD – 1.2226 ( +37 or +0.3% )
The GBP/USD continues to consolidate inside a very narrow range. We continue to watch this market closely for a directional move.
VOLATILITY ALERT: Carney speaks on Wednesday, Quarterly Prelim GDP on Thursday.
For a move to the upside to begin, we would like to see a strong break and close above 1.2297. If the move higher follows through we could see a retest of 1.2480. A strong break and close above this level should see a retest of 1.2622, and if momentum remains strong a move to 1.2720 becomes very possible.
On the downside, we are watching two key areas at 1.2100 and further below between 1.1896 -1.1880.
USD/JPY – 103.82 ( -34 or -0.33% )
The $/JPY is also consolidating its move (higher) and as we get closer to the US Election we expect this market to really move. Things have been quiet out of the Bank of Japan so do not be surprised if they come back into the picture soon!
VOLATILITY ALERT: Household spending on Friday.
For a continued move to the upside we would like to see this market break and close above 103.99. This is a very key level and we were unable to close above it all of last week. Should this occur we may likely see a move to 104.97, and if momentum remains strong we could see a sharp move higher to 106.30.
If however the USD/JPY cannot hold above 103.99, we will look for a move back down to 103.21. A strong break and close below this level could then see 102.29 before a pause. Should we break this level with strong momentum, we may see the USD/JPY fade all the way back down to 100.61.
COMMODITIES
GOLD – 1266 ( +16 or +1.28% )
We saw a small move higher in Gold and the question now is- can Gold sustain last week’s upside momentum and continue higher?
We will discuss this market in more detail throughout the week in our MEMBER PORTAL.
For a continued move higher we would like to see GOLD hold above 1258, followed by an immediate retest of 1276. A strong break and close above 1276 could see this market head higher to 1294 and 1303 before the end of the week.
If Gold cannot hold above 1258, we will look to see this market hold above 1247. However a break below this level may result in more downside for Gold- with the potential for a fast move down to 1222. Should momentum remain strong, we will watch for a move to 1210 before a pause.
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