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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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We may take multiple trades throughout the week and discuss in our LIVE CHAT ROOM.
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INDICES
AUSTRALASIA
ASX – 5245 ( -7 or -0.13% )
The ASX spent the majority of last week going sideways as this market decides whether we are going higher or lower.
VOLATILITY ALERT: NAB Business Confidence on Tuesday, Building Approvals and RBA Cash rate on Tuesday, Monetary Policy on Friday.
For as continued move to the upside we like to see this market hold above 5238. Should we hold above this level we could see a quick move to 5294. A continued rally could then see this move head to 5372 and 5390 before another pause. If momentum remains very strong we could see an extended move into 5487.
If we fail to hold above 5238, we will be looking for a move back down to 5161; and a break below this could result in a move back into 5090. A strong break and close below 5090 could see a quick move back down to 4997.
EUROPE
DAX – 10072 ( -329 or -3.16% )
Last we saw the DAX reverse most of it’s gains from the week prior. The breakout we saw two weeks ago has now been completely faded.
NOTE: Thursday is a public holiday in Germany
For a continued move to the upside we would like to see the DAX hold above above 10013, on its way to retesting 10158. A strong break and close above this level could see the DAX really take off- making fast moves to 10289, 10337 and 10382 before a pause. If momentum is strong we may see a strong move to 10601.
If we fail to hold above 10013, we will look for a move back down to 9907. A close below this level may result in a move down 9822 and should this level fail, we could see a move back down into to 9620. A strong break below this level could see the DAX trade all the way back down to 9560; and if momentum remains strong we would not be surprised to see a move back down to 9386.
US
SP500 – 2067 ( -25 or -1.2% )
The S&P started began to look very weak last Thursday as we saw some strong selling late last week, only to be bought back up again late Friday afternoon. We have spoken about this behaviour in the past and what it means in our MEMBER PORTAL.
VOLATILITY ALERT: Manufacturing PMI on Monday, Non-Manufacturing PMI on Wednesday, Non-Farm Payrolls on Friday.
For a move higher we would like to see a the S&P hold above 2054. Should this occur we will look for a move to test 2076-2079 before a pause. A strong break above 2079 could see a very fast move to retest 2097, and if momentum remains strong we will look for an additional push into 2106 and 2112 again.
If we cannot close above 2079, we may see a move back down to 2054. A break below 2054 may result in a move back down to 2040; and should momentum to the downside continue we will look for a move back down to 2019. If there is a larger sell-off this week, 2002 cannot be ruled out.
FOREX
AUD/USD – 0.7606 ( -103 or -1.34% )
Last week we said if we cannot hold above 0.7662, we will look for a move back down to 0.7561 and that’s exactly what we saw. This week all eyes are on the RBA interest rate announcement on Tuesday.
We will be providing live coverage of this in our LIVE CHAT ROOM.
VOLATILITY ALERT: NAB Business Confidence on Tuesday, Building Approvals and RBA Cash rate on Tuesday, Monetary Policy on Friday.
For a move higher we would like to see the AUD break above 0.7662, followed by a break and close above 0.7729. A strong break and close above this level could see a very strong push up to 0.7833; and if momentum remains strong we will look for a move into 0.7903.
If we cannot break above 0.7662, we will look for a move back down to 0.7561. A break below this level may result in a move back down into 0.7489 and 0.7447. A subsequent break of this level may then result in a move back down to 0.7389 before a pause.
EUR/USD – 1.1446 ( +224 or +2% )
The Euro continues to edge its way higher on the back of a weaker $US and we are now approaching some very interesting levels.
NOTE: Thursday is a public holiday in Germany and France
For a sustained move higher we would like to see a break and close above 1.1453. Should we break this level we will look for a move to 1.1496; and if this rally continues we could then see a very quick move to test 1.1613. Should momentum remain very strong, we could see a big push into 1.1747.
If we cannot break 1.1453 we will look for a move back down to 1.1385. A strong break and close below this level may likely result in a move to 1.1347, and if momentum remains strong we will look for a move to 1.1249. If a larger sell-off ensues, we will be watching 1.1201 and 1.1163.
GBP/USD – 1.4611 ( +212 or +1.47% )
The GBP has continued its strength and this rally we spoke of weeks ago is well underway.
NOTE: Monday is a Public Holiday
VOLATILITY ALERT: Manufacturing PMI on Tuesday, Construction PMI on Wednesday, Service PMI on Thursday.
For a move to the upside we would like to see a strong break through 1.4630. A break and close above this level may likely result in a move to 1.4790 before a pause. If momentum remains very strong, we cannot rule out moves into 1.4896 and 1.4984
If we cannot close above 1.4630, we will look for a move back down into 1.4469. A break below this level will likely result in a move to 1.4382; and if the move to the downside is very strong we will watch for a move back down to 1.4223.
USD/JPY – 106.33 ( -545 or -4.88% )
Once again traders are testing the BoJ’s nerve as the YEN strengthened once again vs the USD, sending the USD/JPY down 400 points in one day.
It will be an interesting week as Japan is closed from for most of the week, so we will be watching the charts closely for any pops up and down. Last week we discussed this market extensively and we will continue to do so this week in our LIVE CHAT ROOM.
NOTE: Tuesday, Wednesday & Thursday are public holidays in Japan.
VOLATILITY ALERT: Non-Farm Payrolls on Friday.
For a continued move to the upside we would now like to see the market hold 106.30 and close above 107.75. Should this occur we will then be looking for a move into 108.31. A strong break and close above 109.21 could then see a quick move into 109.94 before a pause. If we are to see a complete V-reversal and fade to the upside this week, we will not rule out a move to 111.09 by the end of the week.
If however the USD/JPY cannot hold above 106.30, we will look for a move down to 105.79. A break below this level could see the USD/JPY trade quickly down to 104.97 before a potential pause. Should we continue to trade lower and see continued downside pressure on the USD/JPY- a sharp move to 103.99 is possible.
COMMODITIES
GOLD – 1293 ( +61 or +4.95% )
GOLD has now broken out to the upside having spent most of April in a sideways range. Last week we said we were expecting a breakout soon, and if the upside remains strong watch for a fast move to 1294!
For a continued move higher we would like to see a close above 1294, followed by a break and close through 1303. Should this occur we could then see a move into 1322, and a break of this level could see a strong move into 1340.
If Gold cannot hold above 1294, we will look for a move back down to 1276. A strong break and close below this level we could see Gold trade back down to 1258 and if momentum to the downside remains strong we will watch for another move down to 1247 before the end of the week.
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