This market brief is an overview of the week ahead and some of the events we see as being important to the markets.
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INDICES ASX – 5694 ( -13 or -0.23% ) The ASX continues its 4 month long sideways consolidation. What else is there to say other than this market is still range bound. For a continued move higher we would like to see the ASX close above 5746. Should this occur we will look for a retest of 5777, and a strong close above this could result in a quick move to 5823. If momentum is strong we will then look for a rally into 5875 and 5921. If the ASX cannot close and hold above 5746, we are likely to see a quick move down into 5671 and 5648. A close below this level may result in more selling into 5606 and if momentum is very strong a move down into 5582 and 5521 cannot be ruled out.
EUROPE DAX – 12609 ( +76 or +0.61% ) The DAX managed to stay above 12566 and the question now is how will this market react to Merkel’s victory? We will be discussing this in the LIVE CHAT ROOM . VOLATILITY ALERTS: Mon 18:00 – German Ifo Business Climate Mon 23:00 – ECB President Draghi speaks Thu 17:00 – German Prelim CPI (monthly) Fri 16:00 – German Retail Sales (monthly) For a continued move to the upside we must see the DAX hold above 12566. Should this occur we will look for a retest of 12714. A strong break of this level could see the DAX rally quickly to 12783; and if momentum is very strong we will look for a move to 12847. If the DAX fails to hold above 12566, we will look for a move back down to 12384 before another pause. A close below this level however could see the DAX sell-off sharply into 12198 and if momentum is very strong to the downside 12115.
US SP500 – 2501 ( +2 or +0.08% ) The S&P finally managed to close above 2500 for the first week (albeit just). We will be discussing and trading this market exclusively this week in the LIVE CHAT ROOM . VOLATILITY ALERTS: Wed 00:00 – CB Consumer Confidence, New Home Sales Wed 02:45 – FED Chair Janet Yellen speech Wed 22:30 – Durable Goods Orders (monthly) Thu 00:00 – Pending Home Sales (monthly) Thu 22:30 – Final GDP (quarterly) Fri 23:45 – Chicago PMI For a move higher we would like to see the S&P break and close above 2500. Should this occur we will look for a move to 2512. A close above this level could see 2524, and if the rally continues we will look for a spike higher into 2540. If we cannot hold above 2500, we will look for a move back down to 2477. A break below this level could see the S&P head lower into 2465, and a strong break and close below this level may see this market trade back down to 2440. If momentum is very strong to the downside, be cautious of a sharp decline into 2431, 2424 and 2418 by the end of the week.
FOREX AUD/USD – 0.7961 ( -40 or -0.5% ) The Aussie Dollar continues to bounce in and out of our levels and we may see some interesting sentiment this week. For a move higher we must now see this market close above 0.8000 and respectively 0.8034. Should this occur we will look for a retest of 0.8118. A strong break above 0.8118 could see this market rally into 0.8162, and if momentum is very strong we cannot rule out a move into 0.8301. If we cannot close above 0.8000, we will look for a move lower to retest of 0.7903, and if momentum remains strong we will look for a move into 0.7833. Should we break lower however, moves down into 0.7779 and 0.7723 cannot be ruled out.
EUR/USD – 1.1946 ( +1 or +0.01% ) The EURO was again sideways last week and has been for better part of the last month. With the German elections over, is there something else brewing in Europe…? We will be discussing and trading this market exclusively this week in the LIVE CHAT ROOM . VOLATILITY ALERTS: Mon 23:00 – ECB President Draghi speaks Fri 19:00 – CPI Flash Estimate (annual) For a sustained move higher we would like to see the EURO break and close strongly above 1.2042. Should this occur we will look for the EURO to rally into 1.2167, and if momentum is very strong we will look for a move into 1.2229. If the EURO cannot hold above 1.2042, we will look for a move back down into 1.1834. A strong break of this level could then see a move back down into 1.1738, and if downside momentum is very strong we could quickly see a move lower into 1.1678.
GBP/USD – 1.3495 ( -93 or -0.68% ) Last week we warned members of increasing volatility on the Pound and the timing couldn’t have been better: 1.3534 was reached with back to back 200+point days to close off the week. VOLATILITY ALERTS: Wed 18:30 – Retail Sales For a continued move to the upside, we would like to see Cable hold above 1.3524, on its way to retesting 1.3743. A break of this level could see the Pound quickly reach 1.3875 before a pause; and if momentum is very strong a move to 1.4075 cannot be ruled out. If we fail to hold above 1.3524, we may see this market trade back into 1.3436. A strong break below this level could then see this market trade down to 1.3277 before a pause; and if momentum is very strong to the downside we cannot rule out a move to 1.3156.
USD/JPY – 111.99 ( +116 or +1.05% ) The $/YEN reached our key level of 112.68 before a reversal took place on Friday. VOLATILITY ALERTS: Mon 15:35 – BoJ Governor Kuroda Speaks For a move to the upside we must now see this market hold above 111.72. Should this occur we will look for a retest of 112.68 before another pause. However a strong break and close above this level could see the YEN rally strongly into 113.87. If we cannot hold above 111.72, we are likely to see a retest of 111.09. A strong break and close below this level could result in a move back down to 110.45, and if momentum to the downside is very strong we may see a sharp move down into 109.94.
COMMODITIES GOLD – 1297 ( -23 or -1.74% ) Gold has finally reached our short-term 1294 target and as mentioned to members last week this market is ready for a bounce. We will be discussing this market in more detail this week in the MEMBER PORTAL . For a continued move higher we must now see this market close and hold above 1303. Should this occur we will look for a move into 1313 before a pause. If momentum is strong, we could see a sharp move into 1322 and 1333 by the end of the week. If Gold cannot hold above 1294, we will look for a strong move back down into 1284. A break and close below this level could then see this market test the key area between 1276 – 1278; and if momentum is very strong to the downside this week a move to 1257 cannot be ruled out.
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