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 – 5255 ( -64 or -1.2% ) Last week we mentioned ‘the ASX is having a having a hard time breaking out of this sideways consolidation’. Whilst we finished lower last week, we will be watching this market for a directional move this week. VOLATILITY ALERT: Unemployment Rate on Thursday.
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 hold 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 – 9799 ( -309 or -3.06% ) The DAX spent most of last week in a sideways range until a 300 point move down on Friday saw the DAX close down 3% for the week. With little news this week, this market may be sentiment driven and follow the lead of the US.
For a continued move to the upside we would like to see the DAX break above 9822, on its way to retesting 10013. A strong break and close above this level could see the DAX really take off- making fast moves to 10158; and if momentum remains strong we could see a quick move into 10337 and 10382 before a pause.
If we fail to hold above 9822, we will look for a move back down into the 9620. A strong break below this level could see the DAX trade all the way back down to 9560; and if momentum remains strong we would not be surprised to see a move back down to 9386.
US SP500 – 2097 ( -2 or -0.1% ) This week the FED meets for it’s all important June FOMC meeting. Markets are pricing in almost no chance of a raise, we would not be surprised to see a rate hike but are not anticipating it. We will be discussing this market, and the LIVE FOMC event in more depth in the LIVE CHAT ROOM . VOLATILITY ALERT: Retail Sales on Tuesday, PPI on Wednesday, FOMC Interest Rate Announcement on Wednesday, CPI on Thursday, Building Permits on Friday.
For a move higher we would like to see 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 – 0.7371 ( +7 or +0.1% ) The AUD only just finished higher for the week so our levels remain unchanged. VOLATILITY ALERT: Unemployment Rate on Thursday. For a move higher we would like to see the AUD break above 0.7364, followed by a break and close above 0.7447. A strong break and close above this level could then see a quick move to 0.7489 before a pause; and if momentum remains strong we will look for a move into 0.7561. If we cannot break above 0.7364, we will look for a move back down to 0.7282. A strong break below this level may result in a move back down into 0.7229 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7169.
EUR/USD – 1.1254 ( -109 or -0.96% ) The EURO was down almost 1% last week as the big move higher on NFP was faded. VOLATILITY ALERT: Eurogroup meetings on Thursday & ECOFIN meetings on Friday. For a sustained move higher we would like to see this market hold above 1.1249, followed by a quick move to test 1.1347. A strong break and close above these levels could see the EURO head to 1.1385. Should we break this level we could see a quick move to 1.1435 and 1.1496 before a pause. If momentum remains very strong and we break and close above 1.1496, we could see a final push to test 1.1613. On the downside, should we hold below 1.1249 we may see a move back down to 1.1201. Should the EURO continue to taper off, a break below this level may result in quick moves down to 1.1163 and 1.1117 before a pause. If 1.1117 is broken, we will look for the EURO to move back down to 1.1033 and 1.0977.
GBP/USD – 1.4249 ( -264 or -1.82% ) The GBP/USD has been struggling and with less than a fortnight away until the Brexit vote, we are seeing increased intraday volatility so watch this market closely. We will be discussing this market in our . MEMBER PORTAL VOLATILITY ALERT: CPI on Tuesday, Unemployment Rate on Wednesday, Retail Sales on Thursday. For a move to the upside we would like to see this market hold above 1.4194. A break through this level could then result in moves into 1.4382 and potentially 1.4469 before a pause. If momentum remains strong, we will look for moves into 1.4503 and 1.4538, and finally 1.4630. If we cannot hold above 1.4194, we will look for moves down into 1.4041 and 1.4006. A break below this level could see a further move down to 1.3937, and should we see continued downside we will look for a move to 1.3853. If momentum to the downside remains very strong, a sell-off into 1.3743 – 1.3725 cannot be ruled out.
USD/JPY – 106.92 ( +47 or +0.44% ) The USD/JPY spent most of last week in a tight range and we will be watching this market at these levels for a potentially big move UP or DOWN. We will again be discussing this market, and other YEN pairs in our LIVE CHAT ROOM this week. VOLATILITY ALERT: Monetary Policy Statement and BOJ Press Conference. For a continued move to the upside we would now like to see the market hold above 106.30 and close above 107.75. Should this occur we will then be looking for a move into 108.31. A strong break and close above 109.21 could then see a quick move into 109.94 before a pause. If we are to see a complete V-reversal and fade to the upside this week, we will not rule out a move to 111.09 by the end of the week. If however the USD/JPY cannot hold above 106.30, we will look for a move down to 105.79. A break below this level could see the USD/JPY trade quickly down to 104.97 before a potential pause. Should we continue to trade lower and see continued downside pressure on the USD/JPY- a sharp move to 103.99 is possible.
COMMODITIES GOLD – 1273 ( +29 or +2.33% ) For a continued move higher we would like to see a close above 1276, followed by a break and close through 1294. Should this occur we could then see a move into 1303, and a break of this level could see a strong move into 1322. If Gold cannot break above 1276, we will look for a move back down to 1258. A strong break and close below this level we could see Gold trade back down to 1247, and if momentum to the downside remains strong we will watch for another move down to 1226 before the end of the week.
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