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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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INDICES
AUSTRALASIA
ASX – 5279 ( -137 or -2.53% )
Last week we said we will ‘look for a potential breakout one way or another’, and we saw a fantastic breakout to the downside. The ASX sold off aggressively as the week progressed, and as we head into a big week of data we should see quite a bit of volatility.
NOTE: Tuesday is a public holiday in Victoria (Melbourne Cup) however markets will remain open.
VOLATILITY ALERT: RBA Interest Rate on Tuesday, Trade Balance on Thursday, RBA Monetary Policy and Retail Sales on Friday.
For a continued move to the upside we must now see a break back above 5294. If we can hold above this level we could see this market move to 5373. A strong break and close above this level may result in a move to 5437; and if momentum remains strong we could see a move into 5504 and 5521.
If we fail to close above 5294, we will look for a move back down to 5238. A break below this could result in a move back into 5161, and further breaks to the downside could see the ASX head to 5122. If momentum to the downside is strong, a move down to 5071 cannot be ruled out.
EUROPE
DAX – 10655 ( -61 or -0.57% )
The DAX has failed to close above the key 10805 level, however has remained above 10601. This week we will look to see if this market can remain above 10601.
VOLATILITY ALERT: Flash CPI on Monday, German Unemployment on Wednesday.
For a continued move to the upside we would like to see the DAX hold above above 10585 – 10601, followed by a break above 10749. Should this occur, we may see another push higher into 10863. Further breaks of this level could see the DAX rally 10983 and if the move is very strong, 11060 cannot be ruled out.
If we fail to hold above 10601, we will look for a move back down to 10475 and should there be further downside, we could see a move lower to 10382. Should momentum remain very strong, we will look for a move down to 10158.
US
SP500 – 2129 ( -11 or -0.51% )
The S&P500 is becoming very interesting as traders continue to test the lower support levels of this large consolidation. This week we have two major events: A FED meeting AND NFP!
VOLATILITY ALERT: ISM Manufacturing PMI on Tuesday, FOMC Interest rate on Wednesday, NFP on Friday.
We will be covering FOMC and NFP in our LiveTV, so make sure you join us in the MEMBER PORTAL for what is shaping up to be a BIG week.
For a move higher we must now see the S&P break hold above 2137. A strong close above this level could see a retest of 2160, and further breaks to the upside may see a strong move to 2176 before a pause. Should we break 2176 we will look for a move back up into the all-time highs at 2194. If this market breaks and closes above 2194, we cannot rule out a move to 2212 by the end of the week.
If we cannot hold above 2137, we will look for a move back down to 2126. A break and close through 2126 may result in a retest of 2112, with the potential for a quick spike down to 2108. Last week we stated should we break 2108 then watch out. Our comments remain the same this week.
FOREX
AUD/USD – 0.7598 ( -6 or -0.08% )
The AUD has all but closed where it opened last week and as such our levels remain unchanged; but with the news scheduled this week we are likely to see a lot of volatility.
VOLATILITY ALERT: RBA Interest Rate on Tuesday, Trade Balance on Thursday, RBA Monetary Policy and Retail Sales on Friday.
For a move higher we would like to see the AUD close above 0.7617, followed by a strong break and close above the 0.7662 – 0.7683 region. A strong break and close above these levels could then see a quick move to 0.7729 before a pause; and if momentum remains strong we will look for strong move into 0.7789.
If we cannot close above 0.7617, we will look for a move back down to 0.7561. A strong break below this level may result in a move back down into 0.7447, and further breaks lower could see 0.7364 before another potential pause. If momentum remains strong, a break and close below 0.7364 could see a sharp move down to 0.7282.
EUR/USD – 1.0986 ( +104 or +0.96% )
Friday’s rally to the upside means a retest of the all important 1.1000 is now imminent. This is a key level we will be watching this week.
We will be discussing this market in more depth in the LIVE CHAT ROOM this week as to what is the most likely course of action going forward.
NOTE: Tuesday is a holiday in France and Italy (All Saints Day).
VOLATILITY ALERT: Flash CPI Estimates on Monday.
For a sustained move higher we would now like to see the EURO hold above 1.0977. A break above above this level could see the EURO quickly head to 1.1033. If we see continued upside we will then look for a move to 1.1117, and should momentum remain very strong, we will look for a move to 1.1201.
On the downside, if the EURO cannot remain above 1.0977 we will look for a further move down to 1.0902 and 1.0887. A break and close below these levels could see the EURO continue to move lower to 1.0814 before a pause. Should momentum remain very strong to the downside, 1.0738 cannot be ruled out.
GBP/USD – 1.2191 ( -35 or -0.29% )
The GBP/USD remains range bound and our levels have not changed since the flash crash. Once this market breaks out (higher or lower) we should see a substantial move.
VOLATILITY ALERT: Manufacturing PMI on Tuesday, Construction PMI on Wednesday, Services PMI and BoE Interest Rate on Thursday.
We will also be covering Thursday’s Interest Rate Announcement in LiveTV.
For a move to the upside to begin, we would like to see a strong break and close above 1.2297. If the move higher follows through we could see a retest of 1.2480. A strong break and close above this level should see a retest of 1.2622, and if momentum remains strong a move to 1.2720 becomes very possible.
On the downside, we are watching two key areas at 1.2100 and further below between 1.1896 -1.1880.
USD/JPY – 104.70 ( +88 or +0.85% )
Another week higher has seen the $/JPY push into the 105 area. We are now approaching some key levels, and if this market is to go higher we want to see it remain above 104.
NOTE: Thursday is a public holiday (Culture Day).
VOLATILITY ALERT: BoJ Interest Rate and Policy Statement on Tuesday.
For a continued move to the upside we would like to see this market break above 104.97, followed by a quick retest of 106.30. A strong break and close above this level could see the USD/JPY rally to 107.75 quickly, and then 108.31 before a pause. Should we see continued upside, we will look for a move into 109.21
If however the USD/JPY cannot break hold above 104.97, we will look for a move back down to 103.99. A strong break below this level could see the USD/JPY trade quickly down to 103.21, and should we continue to trade lower a sharp move to 102.29 is possible. If momentum on the downside remains we may see 101.12 before the end of the week.
COMMODITIES
GOLD – 1276 ( +10 or +0.79% )
Last week we asked whether Gold was able to sustain its upside momentum, and it did as expected. This week we will look to see whether Gold can rocket higher; and if not- can it close above 1276?
We will discuss this market in more detail throughout the week in our MEMBER PORTAL.
For a continued move higher we would like to see GOLD hold 1276, followed by an immediate retest of 1294. A strong break and close above 1294 could see this market head higher to 1303, and should momentum to the upside remain strong we will look for a move back up to 1312.
If Gold cannot hold above 1276, we will look to see this market to move back into 1258. However a break below this level may result in more downside for Gold- with the potential for a fast move down to 1247. Should momentum remain strong, we will watch for a move to 1222 before a pause.
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