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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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ASX – 5053
The ASX entered a slowdown phase last week and only managed a 50 point gain on last week’s close.
If we are to see the up move continue then a break above 5085 could lead to 5125 being reached.
If the slowdown takes full effect and we see a down move, then a break below 5009 could lead to a fall down towards the 4923-4904 area where support should be found.
FTSE – 6584
The FTSE’s up move slowed down last week and an attempt at a reversal was made but support at 6536 made that a difficult task.
If another attempt at an up move is to be made then we would like to see an early break above 6699 before attempting to break through 6739 and then heading towards the all time highs again.
If a move down is to play out then we need to see 6536 broken early followed by 6439, and if we see solid downward momentum then we could see 6373 before we see the 6306 level again.
DAX – 8279
The DAX slow down has also taken effect and an attempt at a reversal was made, but after breaking through the Standard deviation channel it found support near 8212, before bouncing back to close with the channel. Even though this occurred we haven’t seen the start of the reversal process just yet.
If the slowdown process takes full effect and the DAX starts a reversal process, then we would like to see a solid break below the channel followed by a long down bar breaking 8212. This could lead a move to 8106 which could then be followed by a move to 8006 where support may be found.
As mentioned last week, If the move up is to continue then a solid break past 8352 needs to be made early which will lead the DAX towards all time highs.
S&P – 1691
After breaching its all time highs over the duration of one week, the S&P is now undecided if it wants to continue further. An obstacle to this is that markets will always factor in future events before they occur. For example, potential easing of stimulus by the Fed in September and the possibility that China might be in a prolonged slowdown are two significant factors to consider.
If we see a continuation of the up move then we would look for a solid break past 1710 which is the potential high of the previous range. Once this occurs we could see a new uptrend cycle.
If the S&P’s range is over, then a solid break past 1685 needs to occur early with long solid down bars which could lead a move towards 1648 and possibly 1623 depending on the downward momentum.
NASDAQ – 3077
The NASDAQ had a slow start last week and was in a sideways move until better than expected news from Facebook helped it rally. Even though this occurred the NASDAQ has not broken past the previous high of 3090 which will be an important level moving forward.
If this up move continues then we would like to see a strong rally with long up bars breaking past 3090 followed by a move past 3145 which is the range of the previous moves in April to May.
If a down move is to commence then 3053 and 3027 will be important levels to watch, and if they are broken with strong long down bars then we could see 2989 and 2938 very quickly.
AUD.USD – 9259
The AUD has created a potential reversal of the 1500 point down move by breaking above the Standard deviation channel and closing above a key level of 9162.
If the AUD’s new found uptrend is to take full effect then we would like to see a strong move past the area between 9370 – 9395. Once this is done then we will reassess our targets.
If the longer term downtrend is to continue then solid down bars breaking through both 9202 and 9171 could be the initial stages. Any follow through would come if 9000 is broken with solid momentum.
EUR.USD – 13274
The EUR made its move past 13177 and reached our upper target of 13285 and is still only halfway through its process.
If the move up is to continue then it needs to break past 13285 early, which will then possibly lead to 13354 followed by 13432. If the up move has strong momentum and long up bars then we could see it extend to an ambitious target of 13506.
If there is a break on the downside then we would like to see 13177 broken followed by 13106 and eventually finding potential support near 13084
GBP.USD – 15375
The GBP’s rally continued last week and is now sitting on an important level near 15380.
If we see a continuation of the upmove then we would like to see a solid break past 15426 and 15500 early in the week. This could then lead to a potential target of 15598.
If a reversal is to occur from here then 15380 needs to act as resistance and a move down past 15282 could lead the way to 15184. If the downward momentum is strong then a break below 1 5118 could lead to 15006.
USD.JPY – 98.17
The JPY is proving to be quite resilient, and after passing 100.00 again it has taken another move on the downside to close near the 98 level. We may be seeing smart money moving back into the YEN in the believe that there may be a possible down move in the equity markets.
It will be a matter of time before we see why the JPY is strengthening, but for this down move to take a new leg down we would like to see 97.53 broken with solid momentum. If this occurs then we will looking at 95.08 as the next possible downside level to be reached.
If we are to see a resurgence of the upmove past 100.00 then we need to see a solid break past 101.22 before reaching 102.52 or possibly extending to 102.89.
GOLD – 1333
GOLD has finally reached our projected range of 1346 with a high of point 1347. The big question is what’s the next move for gold? Without making any dramatic predictions, it will come down to what happens next in the world markets. If we see a big move down then GOLD may once again become the safe haven play.
If an extended up move is to start and possibly lead us to a new rally in GOLD, then we would like to see a break past 1378 followed by 1391 which could then lead a move to 1413. Depending on the speed of the move, 1474 will be our ambitious upper target.
If we are to see another aggressive down move then a break below 1302 followed by 1261 is possible. If we see a solid break past 1261 then this could be the trigger for GOLD to dip below 1200.
US LIGHT CRUDE OIL – 104.59
After showing no signs of slowing down LIGHT CRUDE made a move back down by breaking past last 106.53 which is an important level and could be forming a potential reversal.
If a down move is to continue, then any movement to 102.11 could trigger a fall to 100.91 (which is the completion of the previous range set between February and March), and depending on the momentum of the move we could possibly see a dip below 100.00 to 99.46.
If the up move is to continue then 104.25 needs to provide strong support and a solid break past 106.48 could lead to a small rally and a potential break of the highs of 108.89 on the way to 110.00.
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