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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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Trade View has entered the weekend Net Short.
AUSTRALASIA
ASX – 5571 ( + 22 or + 0.40% )
The ASX broke through the Double top formation mid week but then came back to settle near the new previous resistance level. Will it hold this week or will the Bearish Divergence that is close to completion take effect and move the ASX lower once more?
For the up move to continue and possibly start a new trend we would like to see 5562 hold as a solid level of support before a further push towards 5732 is made.
If the Bearish Divergence is completed and a down move restarts then we would like to see a strong long down bar breaking down past 5562 – 5539 area reaching 5491. Once this level is broken we could see moves reaching 5447 and 5415.
EUROPE
FTSE – 6798 ( + 41 or + 0.61% )
The FTSE made another slight move higher with composure while some of the other Indices are somewhat struggling. It has however closed just above an important resistance level of 6792.
For the up move to continue we would like to see 6792 hold as a strong level of support before an attempt is made at breaking through another FICM level of resistance 6857. Once this is achieved and upward momentum is strong we could see 6904 tested. For this to occur the rest of the world markets would need to rally as well.
If the FTSE cannot stay above 6792 and heads back down then a break past 6737 early in the week could lead the Index down to 6696. If the downward momentum continues strong past this point then 6632 could be tested next.
DAX – 9648 ( – 87 or – 0.89% )
In the past we have seen the DAX stretch itself in one direction before the rest of the markets follow, other times it realises they are not following and then it retraces quickly back to previous levels. We are now seeing some decent downward swings in the DAX prices while the rest of the world are reaching new highs and then coming back down. What we are now looking for is a strong move either way from the DAX before sentiment is known.
For the upmove to restart we would like to see a strong break past the area between 9734 – 9771 before a push towards 9856 is made. Once this level is broken we could see 9899 followed by an attempt at breaking 9949 before touching 10,000 again.
For the downward process to continue we would like to see another aggressive leg down through 9579. Once this level is broken then 9454 will try to slow the move down before reaching 9401.
US
S&P – 1977 ( 0 or 0.00% )
The S&P reached another all time high before closing lower and flat for the week and the VIX made another move higher. Hmmmm.
Will 2000 be an elusive level for the S&P?
If the S&P wants to make a statement then it needs to break through the area between 1993 – 2002 before the continuation of the up move can occur.
Our comments for the downside remain the same. For the down move to restart then we would like to see a solid break back down past 1964 with a long down bar reaching the area between 1950 – 47. Once this area is broken 1938 and 1922 will be the next 2 levels we will be watching.
FOREX
AUD.USD – 9396 ( + 3 or + 0.03% )
“This pair is range bound and the 2 FICM levels we are looking for before a significant move occurs are 9203 and 9423. Until these 2 key levels are broken our comments remain the same.”
For the move higher to continue we would need to see an early break and close past 9423 and 9460 before the potential to reach 9539 could occur. Once this is reached the AUD could start a new phase and potentially new up trend.
If the USD finds strength and 9423 proves to be difficult to stay above, then a move past 9333 could reach 9287. If the downward momentum is strong then we would like to see a strong break and close past 9287 reaching 9203 were the AUD might find temporary support.
EUR.USD – 13430 ( – 94 or – 0.70% )
The EUR made another move lower last week breaking past the all important 13481-72 area. There is now one more area to break (13391 – 75 ) before a possible free fall back below 13000 is achieved. The Bullish Divergence mentioned last week is in its final stages of forming which could be enough to support it around these levels.
For an upmove to start we would like to see the Bullish Divergence formation completed and play its role as support near 13391 – 75. Once this is achieved we could see a move higher breaking past 13472 – 81 reaching 13513. If the upward momentum remains strong then we could see further breaks past 13554 and 13589 reaching 13620.
For the EUR to continue it’s move down then we would like to see a strong momentum break with a long down bar through 13391 – 75 reaching 13342. If the downward momentum takes hold and we see a free fall, the levels we will be monitoring are 13342, 13246 and finally 13104.
GBP.USD – 16975 ( – 108 or – 0.63% )
The GBP could not hold on too much longer above 17100 as once it was broken the move was quick to then break down past 17000 levels. This week will be a test for the GBP to see if it can break back above the 17000 level, if not then further downside moves await.
For the GBP to move higher we would like to see solid support near 16936 before another attempt higher. We would like to see a solid break past 17072 again before reaching 17105, a break past this level could then lead the pair towards 17283 and eventually 17324.
For the GBP to move lower we would like to see a solid long down bar break and close below 16935. Once this level is broken we could see the GBP reach 16860 and if the downward momentum is strong then 16777 could be next.
USD.JPY – 10184 ( + 50 or + 0.49% )
The USDJPY made another attempt at moving higher breaking back into the Standard Deviation levels or the range. Once again we see a slight disconnect between this pair and the S&P 500.
For the USD to move higher we would like to see a strong break above 10270 pushing towards 10309. If the momentum is strong then we could see 10356 reached. This level will then need to be broken with a long solid up bar before we see 10410.
If the down move restarts we would like to see a strong break past 10152 – 69 area reaching 10052. If 10052 is then broken with a long solid down bar we could see 9982 – 77.
COMMODITIES
GOLD – 1307 ( – 3 or – 0.23% )
Another attempt at a smackdown on GOLD, but again a big move higher on Friday in line with a move on the VIX higher and another failed all time high on the S&P.
As fellow traders I will ask you this:
Has this formation ever ended well for the equity markets?
Our comments from last week remain the same.
For the upward move to continue higher we would like to see another strong break past 1330 before pushing towards 1351 – 59. Once this area is broken the 1367 – 77 area will play an important role in defining the next move.
If the down move restarts then we would like to see a strong momentum break past 1296 before reaching 1285. Once this level is also broken we could see 1274.
US LIGHT CRUDE OIL – 101.94 ( 0 or 0.00% )
OIL tried to move higher as tensions around the world escalated but then it came back to the previous weeks close. Therefore our comments from last week remain the same.
For the upmove to restart we would like to see an early break back above past 102.44. If the momentum is strong then we would like to see a strong up bar break and close past both 103.48 and 104.06 before further moves are possible.
If the move lower restarts then we would like to see an early break past 101.57 followed by a strong break past 100.15 reaching 99.42. This could then lead OIL to reach 98.21 with the possibility for support near 97.21.
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