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 AUSTRALASIA ASX – 6250 ( -117 or -1.84% ) Volatility returned to the ASX last week with the resignation of PM Turnbull and the subsequent announcement of Scott Morrison as the new Prime Minister. Will markets bounce back this week or is there more turmoil to come? VOLATILITY ALERTS: Thu 11:30 – Private Capex (quarterly) Thu 11:30 – Building Approvals For a continued move higher we must now see the ASX close above 6276 followed by a retest of 6345. Should this occur we will look for a move into 6440, and if momentum to the upside is very strong we cannot rule out a move to 6520. If the ASX cannot close above 6276, we will look for a move back down to 6206 before a pause. A strong break and close below this level however could see the ASX retest 6140, and if downside momentum is very strong we could see a move down to 6085.
EUROPE DAX – 12400 ( +166 or +1.36% ) The DAX has bounced off a very key double bottom and is now at an important area of resistance. We will be discussing this in more detail in the MEMBER PORTAL this week. VOLATILITY ALERTS: Mon 18:00 – German Ifo Business Climate Thu 18:00 – German Prelim CPI (monthly) Fri 16:00 – German Retail Sales (monthly) For a continued move to the upside we must now see the DAX hold above 12384 followed by a move into 12566. A break of this level could then result into a quick move into 12640; followed by continuation into 12714. If momentum to the upside is very strong we cannot rule out a move to 12830. If the DAX fails to hold above 12384, we expect to see a move back down into 12198 before a pause. A break below this level however means we may see more selling into 12115; and if momentum is very strong to the downside we may see a sharp move into 12044. US SP500 – 2875 ( +24 or +0.84% ) The S&P finished off the week closing on its highs and right up against it’s all time highs. We will be discussing this in more detail in the LIVE CHAT ROOM . VOLATILITY ALERTS: Wed 22:30 – Prelim GDP (quarterly) Fri 23:45 – Chicago PMI For a move higher we would like to see the S&P hold above 2840. Should this occur the stage is set for a retest of 2870 and any break above this level could see new all-time highs into 2902. If we cannot hold above 2840, we will look for a move back down to 2808. A break below this level may result in another quick move down into 2794 and 2785; and if momentum to the downside is very strong we cannot rule out a move into 2760.
FOREX AUD/USD – 0.7324 ( +9 or +0.12% ) The Aussie Dollar remained practically unchanged following a volatile close to last week. We will be discussing this in more detail in the LIVE CHAT ROOM . VOLATILITY ALERTS: Thu 11:30 – Private Capex (quarterly) Thu 11:30 – Building Approvals For a move higher we would like to see the AUD hold above 0.7282, followed by a retest and close above 0.7364. A strong break and close above this level could see a quick move to 0.7447 before a pause; and if momentum remains very strong we will look for a big move into 0.7489. If we cannot close above 0.7282, we will look for a move back down to 0.7364. A strong break below this level may result in a move down into 0.7229 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7169 and 0.7112.
EUR/USD – 1.1621 ( +183 or +1.6% ) The Euro has rallied for the second straight week now and is now back inside it’s large sideways range. This will be an important week for this market and we will be discussing this in more detail in the LIVE CHAT ROOM . VOLATILITY ALERTS: Fri 19:00 – CPI Flash Estimate (annual) For a sustained move higher we would like to see the EURO close above 1.1738 this week. Should this occur we could see a strong move into 1.1822; whilst a strong break above this level may see a run into the big figure at 1.2000. If the EURO cannot close above 1.1738, we could see a fast move down into 1.1613. A break below this could be followed by another quick move into 1.1496; and should momentum remain strong we cannot rule out a move to 1.1453. GBP/USD – 1.2848 ( +98 or +0.77% ) Like other markets the Pound has also staged a slight recovery but the sellers remain in control. This will be an important week for this market to see whether the bulls can regain control. NOTE: Monday is a public holiday in the UK (bank holiday) For a continued move to the upside, we would like to see Cable remain above our key level of 1.2720. A strong break through this level could see the GBP/USD trade back up to 1.2868, and should momentum remain very strong we will look for a strong move back into 1.3035. On the downside, should we break and close strongly below 1.2720, we could see the GBP/USD move back into 1.2510. A break below this level may result in a move to 1.2458, and further breaks to the downside may see a sharp move into 1.2297.
USD/JPY – 111.26 ( +76 or +0.69% ) The $/YEN has formed an important base and the question now will be can we remain above the key 110.50 – 111.09 area? For a move to the upside we must now see this market hold above 111.09. A strong break and close above this level could then see the $/YEN rally into 111.73, and if momentum is extremely strong to the upside 112.68 cannot be ruled out. If we cannot hold above 111.09, we will look for a quick retest of 109.94. A break below this level however may result in a fast move down to 109.21, and if the downside remains strong we could see a strong sell-off into 108.31.
COMMODITIES GOLD – 1206 ( +22 or +1.86% ) GOLD remained range bound last week until a very aggressive move higher on Friday saw this market rally over 25+ points into the close . For a move higher we would like to see this market close above 1206 on its way to 1222. Should this occur we will look for a retest of 1238. A close above this level may likely see a further move to the upside into 1247 before a pause. Should momentum remain very strong, we could see a fast move into 1260. If Gold cannot close above 1206, we could see another quick decline into 1187. Any subsequent breaks of this level may result in further downside into 1180, and if momentum to the downside remains very strong we cannot rule out a move into 1170.
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