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 – 5662 ( -253 or -4.28% ) The ASX was again sold off aggressively last week following continued weakness overseas. VOLATILITY ALERTS: Tue 11:30 – Building Approvals (monthly) Wed 11:30 – CPI (quarterly) Thu 11:30 – Trade Balance Fri 11:30 – Retail Sales 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 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 – 11198 ( -351 or -3.04% ) The DAX is now at a very big and key level, and this market should be watched closely this week for anyone interested in equity markets. We will be discussing this market in more detail in the MEMBER PORTAL this week. VOLATILITY ALERTS: Tue 19:00 – German Prelim CPI (monthly) For a continued move to the upside we must see the DAX hold above our key 11050 level. Should this occur we expect to see this market retest 11362; and if momentum is strong we could see a move into 11519. A break above this level could see the DAX further rally into 11686. If the DAX fails to hold above 11050, this market could drop significantly into 10863. If the sell-off continues to be aggressive we cannot rule out a strong move down into 10601.
US SP500 – 2662 ( -103 or -3.73% ) The S&P was also down heavily last week. Can this market rally into the last week of October? We will continue to discuss the implications of this in the LIVE CHAT ROOM . VOLATILITY ALERTS: Thu 23:30 – Core Durable Goods Orders (monthly) Fri 23:30 – Advance GDP (quarterly) For a move higher, we would like to see the S&P hold above 2660. Should this occur we will look for a retest of the key 2680 level. A strong break and close above this level could see another retest of 2704, and if momentum remains strong to the upside we cannot rule out moves to 2720 and 2736. If we cannot hold above 2660, we could see this market continue to sell-off into 2638. A strong break through this level however could quickly see a move down to 2590 before a pause. If momentum to the downside is strong we may see a move lower into 2562; and a close below this level may result in a move down to 2540.
FOREX AUD/USD – 0.7089 ( -30 or -0.42% ) The Aussie dollar is now trading at very key levels and we are watching this market closely this week for a potential reversal higher. VOLATILITY ALERTS: Tue 11:30 – Building Approvals (monthly) Wed 11:30 – CPI (quarterly) Thu 11:30 – Trade Balance Fri 11:30 – Retail Sales (monthly) For a move higher, we would first like to see the AUD close above 0.7113. Should this occur we will look for a move into 0.7197, and if upside momentum remains strong we will look for 0.7229 – 0.7236 before a pause. If the AUD cannot close above 0.7113, we will look for a move lower into 0.7014. A break and close below this level however could see a sharp decline into 0.6997. Any further breaks to the downside could then see the AUD quickly trade at 0.6958 and 0.6934; and if momentum to the downside remains strong we cannot rule out a move into 0.6830.
EUR/USD – 1.1402 ( -112 or -0.97% ) The Euro is yet again testing a very key area having bounced off our 1.1347 level on Friday NOTE: Thursday is a public holiday in France and Italy (All Saints Day) VOLATILITY ALERTS: Tue 21:00 – Euro Prelim Flash GDP (quarterly) Wed 21:00 – CPI Flash Estimate (annual) For a sustained move higher, we would like to see the EURO close and hold above 1.1453 this week. Should this occur we could see a quick move into 1.1496 before another pause. A strong break above 1.1496 could then result in a fast move back up to 1.1613. If the EURO cannot close above 1.1453, we could see a fast move down into 1.1347. A break below level however could be followed by another sharp move down into 1.1249; and should momentum remain strong we cannot rule out a move to 1.1197.
GBP/USD – 1.2827 ( -238 or -1.82% ) A big week is in store for the Pound with more Brexit news expected this week. We will be discussing this in more detail in the LIVE CHAT ROOM . VOLATILITY ALERTS: Mon 20:30 – Net Lending to Individuals (monthly) Thu 20:30 – Manufacturing PMI Thu 23:00 – BoE Interest Rate Announcement Thu 23:30 – Governor Carney Speaks Fri 20:30 – Construction PMI 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 – 111.89 ( -65 or -0.58% ) The $/YEN is showing some weakness. Will this market rally or continue to fall this week following the BoJ Interest Rate Announcement? VOLATILITY ALERTS: Wed 14:30 – BoJ Interest Rate Announcement For a move to the upside we must now see this market hold above 111.73. Should this occur we will look for a test 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 111.73, 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 very sharp move down into 109.94.
COMMODITIES GOLD – 1233 ( +7 or +0.57% ) GOLD continues to grind higher but not without a fight from sellers. This market is now approaching the key 1247 level and we will be keeping an eye on this area this week. For a move higher, we would like to see this market hold above 1222 on its way to re-testing 1238. Should this occur we will look for a retest of 1247, and if momentum is very strong we could see a move into 1260 before a pause. If Gold cannot hold above 1222, we could see another decline into 1216. Any subsequent breaks of this level however may result in further downside into 1206, and if momentum to the downside remains very strong we cannot rule out a move back down into 1187.
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