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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 4983 ( +193 or +4.03% )
Last week we saw the ASX find support at our FICM level of 4754 and we said we would like to see this hold for a snap back higher.
NOTE: Tuesday is a public holiday, Australia Day.
For a continued move higher we would like to see a strong break now through 4997, on our way up to a potential move into 5090. Should momentum stay strong and we break 5090, we may see the market in rally mode with a quick move to 5161 before a pause at 5237.
If we cannot break above 4997, then we could see a move back down to 4890. A break below 4890 may result in a retest of 4782 and below this 4754. Should we break below 4754 we could see a hard and fast move down to 4702 and 4654.
EUROPE
DAX – 9820 ( +344 or +3.63% )
The DAX also saw an aggressive snap-back higher, with a complete reversal off last week’s levels and what a reversal it was.
VOLATILITY ALERT: Draghi speech on Tuesday, FOMC on Thursday.
For a sustained move to the upside we would like to see 9620 hold as support or a strong break above 9882. A break above this level may result in a quick move to 10015 before a short break. Further breaks higher could result in a larger move into 10201. Should we smash through 10201 we could really rocket to 10491.
On the downside we are watching 9620 and a break below could extend this to 9566. If momentum continues to be strong on the downside, we could see the DAX move all the way back down to 9386 and 9322. A break below 9322 could also result in a sharp move lower to 9084.
US
SP500 – 1884 ( -36 or -1.86% )
The S&P showed us how one day can reverse an entire move. On Wednesday we rallied +65 points (+3.6%) in less than 3 hours! 1817 was our downside level, 1910 one of our upside targets. You can find out more about this reversal as we traded it real-time in our LIVE CHAT ROOM.
VOLATILITY ALERT: Thursday’s FOMC Statement.
For a sustained move higher we would like to see a strong break through 1915, with our next level higher at 1933. Should we break 1915 and hold as support, a break of 1933 could send us to 1945 before a short pause. If a rally pursues we may see quick moves into 1969 and 1990.
Should the S&P fail at 1915 we could see a move back down to 1875. Further breaks will likely see us go to 1854, and below this we have retests of 1836 and 1817. A break 1817 we could see a spike move down to 1782
FOREX
AUD/USD – 0.6859 ( +145 or +2.11% )
The AUD finally broke back through 0.7000 albeit not convincingly. This market is trying to decide where to go from here- UP or DOWN? There is additional commentary from our traders in our MEMBER PORTAL which shows why the AUD is behaving the way it is..
For a move higher we would like to see the AUD break and hold above 0.7016. If so we are likely to test 0.7059. A strong break above 0.7059 could mean 0.7113 before a pause. If momentum is strong we could then see a move to 0.7197 and 0.7229.
On the the downside we will be watching 0.6958 and 0.6934. A strong break through 0.6934 could see us retest 0.6830. A break and close below 0.6830 could see the AUD lower to 0.6778 and 0.6716.
EUR/USD – 1.0912 ( -116 or -1.06% )
Last week we wanted a strong break above 1.09771 and the Euro failed right at this level. Then Draghi spoke, the EURO fell sharply, immediately faded the move all the way back up, and has since drifted lower. Markets go up, markets go down.
VOLATILITY ALERT: Draghi on Tuesday, FOMC on Thursday.
For a sustained move higher we would now like to see a strong break and close above 1.0835. Above this we have 1.0927 and 1.0977 before a pause. A break above 1.0977 will likely see a retest of 1.1050, and above this we will be watching 1.1117. If the upside remains strong we may see another push higher into 1.1256.
Should this move continue lower we would like to see 1.09771 hold as resistance, and a move down into 1.0727 – 1.0701 before a pause. A strong break below 1.0701 would allow for a move to 1.0635 before a retest of 1.0521.
GBP/USD – 1.4254 ( +11 or +0.08% )
Have we seen the end of the Pound’s freefall??? We will be posting some discussion on this today in the MEMBER PORTAL.
VOLATILITY ALERT: BoE Carney also speaking Tuesday night.
The GBP tried to move higher on Friday but failed to close above 1.4382. As such our upside levels remain the same. We would like to see a strong bar break and close higher through 1.4382, with immediate follow through into 1.4469. If momentum remains strong to the upside we will be watching for a move into 1.4635.
On the downside a break below 1.4223 could send the pound lower to 1.4194 before a pause. If there is no stopping this move down we could see a very sharp move into 1.40396.
USD/JPY – 118.77 ( +179 or +1.53% )
Last week’s levels of 116.04 & 116.10 saw the USD/JPY rally +291 points higher into our 118.27 upside target.
VOLATILITY ALERT: FOMC on Thursday, BoJ press conference on Friday.
Should the move to the upside to continue we would like to see 117.74 hold, and a break of 118.84. This could result in a move into 119.20 before this upside moves pauses. If momentum stays strong we could see further rallies into 120.01, and a break through here could send the Yen to 120.36.
On the downside, a break below 118.27 could see us head back down to 117.74 before finding support. If we continue to break lower we will be watching 117.02. Below this we will again look for 116.32 and 116.10.
COMMODITIES
GOLD – 1097 ( +9 or +0.83% )
Nothing new on GOLD, it is still chopping and churning. Gold traded through last week’s 1096 level but the break was not strong and fell off near our 1106 level.
This week we will again look for GOLD to hold 1096 and break UP through 1106. This could result in a move to 1118 and 1126 before a pause to the move. Should we break above 1126 we will be watching GOLD for potential moves to 1139 and 1146.
Last week’s comments remain largely the same. If the market continues to fail at 1096 we should see a move to 1079. Should we break below 1079 we could quickly see a move down to 1058 and 1052.
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