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 – 5426 ( +75 or +1.4% ) The ASX appears as though it is trying to break out of sideways consolidation, rallying for most of last week and closing near it’s highs. VOLATILITY ALERT: Building Approvals & Current Account on Tuesday, Quarterly GDP on Wednesday, Retail Sales and Trade Balance on Thursday. For a continued move to the upside we would like to see this market break and close strongly above 5437. If this were to happen, we could see a move into 5504 and 5521. A strong break above these levels could see a move to 5589, and if momentum remains very strong we could see the ASX rally to 5664 by the end of the week. If we fail to close above 5437, we will look for a move back down to 5373. A break below this could result in a move back into 5294, and further breaks to the downside could see the ASX head to 5238. If we see a complete reversal to the downside, we will watch 5161 as a potential area of support.
EUROPE DAX – 10297 ( +378 or +3.81% ) The DAX is now in rally mode and we will be watching for this move to continue higher. VOLATILITY ALERT: German Prelim CPI on Monday, German Retail Sales & Unemployment on Tuesday.
For a continued move to the upside we would like to see the DAX break above 10382. A strong break and close above this level could see a retest of the April high at 10524. If we break above this level we will watch 10601 – 10624 before this move potentially comes to a pause. Should momentum remain very strong this week we will then be watching 10863.
If we fail to break above 10382, we will look for a move back down to 10158. A break below this level could see the DAX trade to 10013, and further breaks to the downside may result in a strong move back down to 9822.
US SP500 – 2099 ( +47 or +2.29% ) Like other equity markets, the S&P also rallied strongly during the week and we are now fast approaching some big levels. We will be discussing this market in more depth in the LIVE CHAT ROOM .
NOTE: Monday is a holiday due to Memorial Day.
VOLATILITY ALERT: CB Consumer Confidence on Tuesday, ISM Manufacturing PMI on Wednesday, NFP on Friday, ISM Non-Manufacturing PMI on Friday.
For a move higher we would like to see a the S&P hold above 2097. Should this occur we will look for a move back up into 2106. A strong break and close above 2106 will like result in a move to 2112 before another pause. If momentum remains strong, a break above 2112 could see the S&P quickly test 2126 and then on it’s way to test the all-time high at 2137.
If we cannot hold above 2097, we will watch for a move back down into 2076 before a pause. A strong break and close below this level could see the S&P head back down into 2054, and a further break below this level may mean another test of the important 2040 area.
FOREX AUD/USD – 0.7184 ( -39 or -0.54% ) The Aussie dollar has once again weakened on rumours of further rate cuts in future. As this market remained sideways for most of the week our levels remain unchanged, however keep in mind there is plenty of economic data out this week so we will be watching this market closely. VOLATILITY ALERT: Building Approvals & Current Account on Tuesday, Quarterly GDP on Wednesday, Retail Sales and Trade Balance on Thursday. For a move higher we would like to see the AUD hold 0.7169 and break above 0.7229. Should this occur we will look for a move into 0.7282. A strong break and close above this level could see a quick move to 0.7364 before a pause; and if momentum remains strong we will look for a move back up into 0.7447. If we cannot hold above 0.7169, we will look for a move back down to 0.7112. A strong break below this level may result in a move back down into 0.7070 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7014.
EUR/USD – 1.1112 ( -101 or -0.9% ) Like the $AUD the EURO was also weaker last week on the back of $US strength. This week all eyes are on Mario Draghi and the ECB, as we look to what new developments (if any) the have for us at the Press Conference on Thursday VOLATILITY ALERT: CPI Flash Estimate on Tuesday, Interest Rate Announcement and ECB Press Conference on Thursday.
For a sustained move higher we would like to see the EURO break above 1.1117 followed by another break back above 1.1163. Should this occur we will look for a move to 1.1201. If momentum to the upside remains strong we will look for further moves higher into 1.1248; and if there is no stopping the upside we could see strong moves into 1.1347 and 1.1385.
On the downside, if we cannot hold above 1.1117 we could see the EURO head back down to 1.1064 and 1.1033. A strong break below these levels could see a quick move down to 1.0987 before another pause. Should this level be broken, we will then look for a move to 1.0897; and a further break may result in a retest of 1.0814.
GBP/USD – 1.4618 ( +114 or +0.79% ) With less than four weeks to go until the referendum, the sideways action we’ve seen over the past month may soon begin to resolve itself in a strong, directional move.
NOTE: Monday is a bank holiday due to Spring Bank Holiday.
VOLATILITY ALERT: Manufacturing PMI on Wednesday, Construction PMI on Thursday, Services PMI on Friday.
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 – 110.23 ( +7 or +0.06% ) Last week we saw the YEN in a very choppy sideways move- down/up then down/up again. However it did close near its weekly high and the Weekly bar is quite interesting. We are still targeting a FULL FADE of the move down at the end of April, and we are not far away now… We will again be discussing this market, and other YEN pairs in our LIVE CHAT ROOM . VOLATILITY ALERT: Annual Retail Sales on Monday, Household spending on Tuesday.
For a continued move to the upside we would like to see the market hold above 109.94. Should this occur we will look for a move to 110.70 and watch this area closely. If we can break and close strongly above 110.70, we will look for a move to 111.09. A break above this level may then result in a move to 111.73.
If however the USD/JPY cannot hold above 109.94, we will look for a move back down to 109.21. A strong break below this level could see the USD/JPY trade quickly down to 108.31 again before a potential pause. Should we break below this level we could see continued downside pressure for the USD/JPY and quickly see moves into 107.75 and 106.30
COMMODITIES GOLD – 1212 ( -40 or -3.19% ) GOLD has been smashed once again and is now down 8 consecutive days. We are watching this market for a pause of this down move soon, but keep in mind should the $US continue to strengthen, more downside may be in store for GOLD.
For a continued move higher we would like to see GOLD hold above 1206, 1247, followed by a break and close above 1222. A break and close above this level could see Gold trade back to 1257, and should we break this level we will look to 1276 before a pause.
If Gold cannot hold above 1206, a strong break and close below this level could see a fast move down to 1187 before a pause. If we continue to break lower, we will then be watching for moves to 1184 – 1180. If the downside momentum is very strong, we could see a move to 1171 before the end of the week.
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