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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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NOTE: Last week we saw the people of the UK vote to leave the EU. The result? Extremely large sell-offs across most financial markets, with the exception being traditional safe-havens such as Gold and Bonds. We will understand the impact of these moves further this week, however we remind you to be cautious of quick snap-backs as governments and central banks are ready to intervene.
INDICES
AUSTRALASIA
ASX – 5274 ( +147 or +2.87% )
Last week saw the ASX rally as we approach pre-Brexit levels. It will be a very interesting week this week.
We will be discussing this market in more detail in the LIVE CHAT ROOM.
VOLATILITY ALERT: Building Approvals on Monday, Retail Sales, Trade Balance and Interest Rate announcement on Tuesday.
For a continued move to the upside we would like to see this market break back up and hold above 5294. Should this occur, we will look for a move back up to 5373 – 5390. A strong break and close above this level could see the market trade to 5487, and if momentum remains very strong we could see the ASX rally to 5589 by the end of the week.
If we fail to break above 5294, we will look for a move back down to 5248-5238. A break below this could result in a move back into 5161, and further breaks to the downside could see the ASX head to 5238. Should we see a complete reversal to the downside, we will watch for a move back down to 5090.
EUROPE
DAX – 9758 ( +320 or +3.39% )
Whilst weaker than other equity markets the DAX is showing signs of higher prices.
VOLATILITY ALERT: Germany Factory Orders on Wednesday, ECB Monetary Policy Minutes on Thursday.
For a continued move to the upside we would like to see this market hold above 9620. A break above this level could see the DAX retest 9822. Should we break 9822, we will be watching further upside moves into 10013 and 10158. If we continue to rally, a strong move into 10337 cannot be ruled out.
On the downside, we will be watching 9514 closely. A break and close below this level could likely result in a retest of 9447, and should we break below this level we will then look for a move down into 9386 and possibly 9322. If the moves to downside remain very strong, we could see a very sharp move into 9128.
US
SP500 – 2104 ( +78 or +3.85% )
The S&P closed above the key 2100 level last week as the market once again eyes the all-time highs at 2137.
We will be discussing this market in more depth in the MEMBER PORTAL.
NOTE: Monday is public holiday- Independance Day.
VOLATILITY ALERT: ISM Non-Manufacturing PMI & FOMC Meeting Minutes on Thursday, NFP 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 – 0.7493 ( +28 or +0.38% )
The AUD faces an important week this week as no party has been announced as the winner to the 2016 Australian Election. If there is a hung parliament we may see some weakness in the AUD.
Add to this an interest rate announcement on Tuesday so BE PREPARED.
VOLATILITY ALERT: Building Approvals on Monday, Retail Sales, Trade Balance and Interest Rate announcement on Tuesday.
For a move higher we would like to see the AUD hold above 0.7447, followed by a break and close above 0.7489. A strong break and close above this level could then see a quick move to 0.7561 before a pause; and if momentum remains strong we will look for a full fade move into 0.7617.
If we cannot hold above 0.7447, we will look for a move back down to 0.7364. A strong break below this level may result in a move back down into 0.7282 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7229.
EUR/USD – 1.1139 ( +48 or +0.43% )
The EURO edged only slightly higher over the past week so our levels remain unchanged.
VOLATILITY ALERT: ECB Monetary Policy Minutes on Thursday.
For a sustained move higher we would like to see the EURO hold above 1.1064, followed by strong breaks above 1.1117 and 1.1163; on its way to retesting 1.1201. A break above 1.1201 may result in a retest of 1.1248, and if momentum remains strong we could see fast moves into 1.1347 and 1.1385 before a pause.
If the EURO cannot hold 1.1064 we will watch for a move back down to 1.1033 – 1.1026 before a pause. A strong break and close below this level may see the EURO move back down to 1.0977. If momentum remains very strong we could see a sharp move down to 1.0897.
GBP/USD – 1.3270 ( -389 or -2.85% )
Like other markets Cable appeared to be staging a recovery until the BoE announced it was ready to ease monetary policy in the coming months.
With markets being a forward mechanism, the question now remains: Has this already been priced in during the Brexit crash, or is there more downside to come?
We will be covering this market again in our MEMBER PORTAL and LIVE CHAT ROOM again this week.
VOLATILITY ALERT: Construction PMI on Monday, Services PMI and Governor Carney speaks on Tuesday, Manufacturing Production on Thursday.
For a move to the upside we would like to see this market break above 1.3518 and retest 1.3725. A strong close above these levels could see the GBP head quickly to 1.3853, and finally 1.4006 before a pause. If momentum remains very strong we will look for moves into 1.4041, 1.4194 and 1.4223.
If we cannot break above 1.3518, we will look for a move back down to 1.3227. A break below this level could see a quick leg down into 1.3035. Should we break this level we will watch 1.2928 and if momentum is very strong we will look for 1.2720.
USD/JPY – 102.42 ( +23 or +0.23% )
Once again the USD/JPY appears to wait for the BoJ. How far will Kuroda allow this market to be sold until they step in?
VOLATILITY ALERT: Governor Kuroda speaks on Thursday, Current Account on Friday.
For a continued move to the upside we would like to see this market hold above 102.29, followed by a break and close above 103.21. Should this occur we will look for move into 103.99. A strong break above 103.99 could see a move to 104.97, and if momentum remains strong we cannot rule out a sharp move higher to 106.30.
If however the USD/JPY cannot hold above 102.29, we will look for a move down to 101.12 and 100.76 – 100.61. A strong break below these levels could see the USD/JPY trade quickly down to 99.90 before a pause. Should we continue to trade lower and see continued downside pressure on the USD/JPY- a sharp move to 98.22 is possible.
COMMODITIES
GOLD – 1341 ( +26 or +1.98% )
Markets continue to look to Gold as a safe-haven and the rally in precious metals continues.
For a continued move higher we would like to see GOLD hold above 1322, followed by a strong break and close above 1322. Should this occur we could see a move to retest 1355.
If Gold cannot hold above 1322, we will look for a move back down to 1309 -1303. Should we see a strong break and close below this level, we could see Gold trade down to 1297.
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