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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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We may take multiple trades throughout the week. Currently Trade View is Net Long.
AUSTRALASIAN SESSION
ASX – 4982
The ASX is in the process of completing its first down move after an extended rally.
It has broken our first level of 4982, and now the challenge is, will it stay below this level?
We would not be surprised if this market moves sideways for some time from here.
The levels that we are looking at here are 4902 as a short term target, and 4719 in the near future. If the ASX finds support at current levels then there may be a small up move to around 5250, but any aggressive down moves should see the start of the correction that everyone has been talking about.
EUROPEAN SESSION
FTSE – 6474
The FTSE has taken a breather in the 3rd extension of its up move. For the down move to take real effect we are still looking for 6307 to break and then looking to reach 6079 before heading down to 5922 where it should find support.
We need to consider the current position of the down move. It still hasn’t broken 6307 which could actually become support, and a bounce off this level could see our previous extension target of 6578-81 where we will be looking to go short as part of our overall strategy.
DAX – 7935
Normally the DAX will make a move ahead of the others but in this case it gone sideways which could mean the market doesn’t believe that the problems in Cyprus is as big an issue as the media has portrayed it to be.
We would like to see a solid break below 7924 for the short position to play out and once this happens the levels of 7584 followed by 7434 should be reached.
We are also mindful that the DAX could be preparing itself for a new up move, this will be monitored if 8050 is broken.
CAC – 3789
The CAC gave in last week which signalled for us a short position, but for the short to play out it needs to stay below 3792. Our next possible target is 3678 followed by 3572 if the down move continues.
A solid bounce back through 3813 and 3828 could see an ambitious target of 4068 play out.
US SESSION
SNP – 1558
We are in a slowdown process of the rally that we have seen since October 2012, and this has been confirmed by the sideways trading.
The US Treasuries are making it hard as they don’t want to break above 14400 for the reversal of equity markets to take effect. For this to happen we need to see a solid break below 1540 which could lead the way down to 1500. the closer we get to May the chance for lower levels of 1465 or even 1433 could be achieved.
The SNP is pushing itself forward and if we see any good news come out then we could be setting up to extend beyond 1582 as our first target and then maybe even 1600.
NASDAQ – 2797
The NASDAQ is still trying to lead this rally but it continues to struggle and break free as figures out of the US are not as good, coupled with continuous comments from the media about Cyprus which are stalling the rally.
Let’s put Cyprus into perspective:
Cyprus = approx $17 Billion issue
US = approx $16 Trillion issue
Even though we have an uncertain situation as portrayed by the media with Cyprus, the NASDAQ is still sitting on a potential support level of 2783. This level needs to be broken well before we see 2695.
If we do bounce off this level then we could see 2875 tested.
FX MARKETS
AUD.USD – 10443
Well done to the AUD as its hard work has paid off breaking both 10353 and 10406 in the same week. But now it is at a decent resistance level of 10445 which should hold it back and possibly see it retrace back to the previous.
We would like to see solid moves on the upside for the AUD to find its legs and head towards 10554, but we need to be careful of being too ambitious if we see the overall markets pull back.
A break below 10353 could see our downside target of 10182 come about.
EUR.USD – 12987
The EUR almost took out FICM’s support level of 12963 by hitting a low of 12943, but it had no conviction at this level to move any lower. But this may change this week as the move is still half way before completion and this could take a leg down towards 12701 in the near term.
We are seeing many re-entry triggers on the downside at these levels, but we feel that if a bounce occurs off the current levels, then 13083 could be reached (possibly even higher). A strong bar down should confirm the next target.
GBP.USD – 15228
The up move has started and the fact that the GBP broke and closed above 15184 is a positive sign, but our next level of resistance could come about at 15324.
We will be looking for a continuous move towards 15808 with the current momentum. We aren’t getting too excited though, as the two levels mentioned above could prove solid resistance points and heavy down moves could follow as a result.
USD.JPY – 9438
The USD.JPY is in its slowdown process and a sideways move is playing out. If we see a move down in the equity markets, then this currency pair could follow the same direction unless the BOJ comes out with a surprise comment, then anything is possible.
We feel that a down move should find support near 9241 before moving back towards 100.
COMMODITIES
GOLD – 1608
GOLD has followed its move up after finding support at the 1570’s levels and breaking through 1600 which was the first challenge to achieve.
FICM indicated a potential resistance at 1612 as the current move is now reaching a slowdown process. But if we see a strong move through this level then it could also act as support on its way to 1630 then 1660.
A move down from here could see GOLD come back down to 1579, and if that level is convincingly broken then possibly 1550 and 1525.
US LIGHT CRUDE OIL – 93.83
LIGHT CRUDE has played out the current move but has closed higher than a short term resistance level of 93.47. Holding above this level could see an extension of the up move towards 97.42.
If it breaks back down through 9347 then it should find support at 9018 unless some really bad news comes out.
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