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 – 5055 ( -23 or -0.45% ) We saw a volatile week on the ASX and the indecision continues. Building Approvals & Retail Sales on Monday, Interest Rate Announcement on Tuesday. VOLATILITY ALERT:
For a continued move higher we would like to see a strong break and close above 5090. Should we break this level we could see a move to 5161, a continued rally could see this move head back up to 5238 before a pause.If momentum remains strong we could see an extended move into 5294.
If we fail to break 5090, we will be looking for a move back down to 4997; and a break below this could result in a move back into 4921. A strong break and close below 4921 could see a sharp move back down to 4890.
EUROPE DAX – 9817 ( -80 or -0.81% ) Like the ASX the DAX remains in a sideways move. When these markets breakout the move will be explosive so BE PREPARED . We will be discussing potential breakout moves in our LIVE CHAT ROOM . ECB Draghi speaking on Friday. VOLATILITY ALERT: For a continued move to the upside we would like to see a strong break and close above 10013. A close above this level will likely see the DAX push to 10131 and 10158; and if we continue to rally we will be watching for further moves to 10289 and 10382. If we fail to close above 9907 and 10013, we will look for a move back down to 9822. A close below this level may result in a move down 9620 and should this level fail, we could see a move back down into to 9560. A strong break below this level could see the DAX trade all the way back down to 9386 if momentum is strong to the downside.
US SP500 – 2073 ( +34 or +1.67% ) Last week’s NFP once again did not disappoint with an initial move down followed by 30 point rally into the close . VOLATILITY ALERT: Manufacturing PMI on Tuesday, Yellen Speaks 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 however could see a very fast move to 2097, and if momentum remains strong we will look for an additional push into 2106 and 2112. If however we cannot close above 2079, we may see a move back down to 2066 and consequently 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. 7676 ( +172 or +2.29% ) This week we have the RBA meeting on the cash rate and we are at some interesting levels. Will we see the AUD continue to rally or potentially top here? We will be discussing potential breakout moves in our LIVE CHAT ROOM . VOLATILITY ALERT: Building Approvals & Retail Sales on Monday, Interest Rate Announcement on Tuesday. For a move higher we would like to see the AUD hold above 0.7662, followed by a break and close above 0.7729. A strong break and close above this level we could see a very strong push up to 0.7833; and if momentum remains strong we will then be looking for 0.7903. If we cannot hold 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. 1391 ( +229 or +2.05% ) The EURO continues its slow grind higher on the back of a weakening $US. With some big levels ahead and little data this week, where do we go from here? For a sustained move higher we would like to see a break and close above 1.1435. Should we break this level we will look for a move to 1.1496; and if momentum remains strong we could then see a very strong move to test 1.1613. If we cannot break 1.1435 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 – 1.4224 ( +96 or +0.68% ) Last week we saw a strong rally early in the week reverse to the downside on Friday. As such our levels remain unchanged. VOLATILITY ALERT: Construction PMI on Monday, Services PMI on Tuesday, Manufacturing Production on Friday.
For a move to the upside we would like to see 1.4223 hold and a break through 1.4382. Should this occur we should see a move to test 1.4469 before a pause. If however momentum remains strong, we will look for moves into 1.4503 and 1.4538, and finally 1.4630.
If we cannot hold above 1.4223, we could see a move back down to 1.4194. A break below this level could see the GBP head lower all the way back to 1.4079; and further breaks may result in a move down to 1.4039 before a pause. If momentum to the downside remains strong, we could see 1.4079 and 1.3937 before the week ends.
USD/JPY – 111.60 ( -145 or -1.28% ) After last week’s warning of 7 consecutive up days the USD/JPY is back to testing the lows. This week we have a relatively quiet week from a data standpoint but expect volatility in the $/JPY to continue. For a continued move to the upside we would like to see 111.09 hold as support, followed by a break and close above 111.73. A break above this level could see the USD/JPY quickly head to 112.40, and should we continue to break higher we will look for further moves back up to 113.37 and 114.14. If we cannot break 111.73, a break and close below 111.09 could see the USD/JPY head MUCH lower, and very quickly into 109.94. A break below 109.94 could again result in a sharp move down to 109.21; and if the USD/JPY continues on a downward move we may see 108.31 and 107.75.
COMMODITIES GOLD – 1222 ( +5 or +0.41% ) A wide range bar last Wednesday saw Gold breakdown through the previous weeks’ consolidation. For a continued move higher we would like to see 1206 hold as support, followed by a break and close through 1222. Should this occur we could see a strong move to 1247, and a break of this level could see a move into 1258 before another pause. If momentum to the upside remains very strong we will watch for a retest of 1276. If Gold cannot hold above 1206, we will look for a move back down to 1187. A strong break and close below this level we could see Gold trade back down to 1181; and additional breaks lower could see this market head back down to 1160.
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