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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 5530 ( -46 or -0.82% )
Following the RBA’s decision to cut rates last week, the ASX reversed lower mid-week only to find a base and attempt a move higher on Friday. This week will be interesting to see if the ASX can test last Monday’s high, or whether we go lower from here.
We will be discussing this market in more detail in the LIVE CHAT ROOM this week.
VOLATILITY ALERT: NAB Business Confidence on Tuesday.
For a continued move to the upside we would like to see this market hold above 5521. Should this occur, we will look for a move higher into 5589. A strong close above this level may see the ASX rally to 5651 by the end of the week.
If we fail to hold above 5521, we will look for a move back down to 5437. A break below this could result in a move back down into 5373. Further breaks to the downside could see the ASX fall aggressively back down to 5294 and the important 5248-5238 area.
EUROPE
DAX – 10359 ( +9 or +0.09% )
The DAX only just managed to finish the week higher, and given the week pretty much ended off where we started, our levels remain unchanged.
VOLATILITY ALERT: German Quarterly Prelim GDP on Friday.
For a continued move to the upside we would like to see the DAX hold above above 10289 and ideally 10382. If so we could see the DAX really take off- making fast moves to 10585 – 10601 before a pause. If momentum is VERY strong we would not rule out an explosive move to 10863.
If we fail to hold above 10289, we will look for a move back down to 10158. A close below this level may result in a move down 10013 and should this level fail, we could see a move back down into to 9907. A strong break below this level could see the DAX trade all the way back down to 9822; and if momentum remains strong we would not be surprised to see a move back down to 9620.
US
SP500 – 2180 ( +4 or +0.18% )
The S&P managed to close near its highs and has once again posted new all-time highs, on the back of strong NFP numbers on Friday. This market is again poised for a move higher and we will be watching this market closely this week.
We will be discussing this market in more depth in the MEMBER PORTAL.
VOLATILITY ALERT: Prelim Nonfarm Productivity on Tuesday, Retail Sales and PPI on Friday.
For a move higher we must now see the S&P hold above 2176. Should this occur we will look for a move into 2194. A strong break and close above 2194 is likely to see the S&P set its sights for 2200. If we can hold above 2200 this week, we will ultimately then look for a move into 2212. Should momentum remain very strong, 2234 cannot be ruled out.
If we cannot hold above 2176, we will watch for this market to hold 2150. A break below 2150 may see this market retest the previous all-time highs at 2137. A strong break through 2137 could result in a move back down to 2126, and should we break 2126 we cannot rule out a move back down into 2112 by the end of the week.
FOREX
AUD/USD – 0.7616 ( +18 or +0.24% )
The AUD finished the week off slightly stronger despite the RBA’s decision to cut rates down to 1.50%. This market is ‘bucking’ the fundamental trend and this week will be key- will the RBA’s efforts to stem the $AUD strength work? We’ll soon find out.
We will be discussing this market in more depth in the MEMBER PORTAL.
VOLATILITY ALERT: NAB Business Confidence on Tuesday.
For a move higher we would like to see the AUD hold above 0.7561, followed by a break and close above 0.7617. A strong break and close above this level could then see a quick move to 0.7662 before a pause; and if momentum remains strong we will look for strong move into 0.7729.
If we cannot hold above 0.7561, we will look for a move back down to 0.7447. A strong break below this level may result in a move back down into 0.7364 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7282.
EUR/USD – 1.1082 ( -86 or -0.77% )
The EURO is under pressure now from various fundamental factors. With Friday’s strong NFP number the EURO saw a sustained sell-off, which could be the beginning of a larger move.
VOLATILITY ALERT: German Quarterly Prelim GDP and Flash GDP on Friday.
For a sustained move higher we would like to see the EURO hold above 1.1064. If this market can hold above this level we will look for moves into 1.1117 and 1.1163. Breaks of these levels may see a retest of 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 before the end of the week.
If the EURO cannot hold 1.1064 we will watch for a move back down to 1.1033. A break below this level could see this market trade quickly down to 1.0977. Should we see further breaks to the downside, a move to 1.0897 cannot be ruled out; and if momentum remains very strong we could see a sharp move down to 1.0814.
GBP/USD – 1.3055 ( -167 or -1.26% )
Last week the BoE moved on their interest rates for the first time in 7 years, reducing the benchmark rate down to 0.25%. This resulted in a sharp sell-off as Cable finished the week lower.
This market is now at a very key level and we will be discussing the GBP/USD in more depth in the MEMBER PORTAL.
VOLATILITY ALERT: Manufacturing Production and Trade Balance on Tuesday.
For a move to the upside we would like to see this market break and close above 1.3227. A break above this level could see the market retest to 1.3426. Should we see a strong break through this level we will look for a quick move to retest 1.3495, and if momentum remains very strong a push to 1.3644 cannot be ruled out.
If we cannot break above 1.3227, we will look for a move back down to 1.3035. A strong break below this level could see a quick leg down into 1.2928. Should we break this level we will watch for a sharp move down to 1.2869; and if momentum is very strong a retest of the low at 1.2798 cannot be ruled out.
USD/JPY – 101.80 ( -25 or -0.24% )
The $USD/JPY has finished off the week where it started, and as such our levels remain unchanged.
NOTE: Thursday is a Bank Holiday in Japan.
VOLATILITY ALERT: Current Account on Monday.
For a continued move to the upside we would like to see this market break 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 break 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 – 1336 ( -15 or -1.11% )
Gold again drifted lower last week as the bears are still around. If we begin to see sustained strength in equity markets and the US Dollar, we may see Gold fall to lower levels.
For a continued move higher we would like to see GOLD hold above 1333, followed by a strong break and close above 1355. Should this occur we could see a move to retest 1375, and a strong break and close above this level could see a fast spike to 1380.
If Gold cannot hold above 1333, we will look for a move back down to 1322. A break below this level may see GOLD trade down to 1309 -1303. Should momentum on the downside remain strong, we could see Gold trade all the way back down to 1297.
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