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 ASX – 5846 ( -33 or -0.56% ) The ASX managed to finish the week lower however we are again set for a potential test of 6000. We will be discussing this in the LIVE CHAT ROOM this week. VOLATILITY ALERT: Monetary Policy Meeting Minutes on Tuesday, NAB Quarterly Business Confidence on Thursday. For a continued move higher we must now see the ASX break and close above 5921. Should this occur we will look for a move to 5985. A break through this level could see a retest of 6000; and if momentum is very strong we cannot rule out a move to 6140. If the ASX cannot close above 5921, we will look for a move back down to 5823. A strong break and close below this level could see the ASX test 5777, and if momentum is strong we could quickly see further moves down to 5746 and 5705.
EUROPE DAX – 12091 ( -134 or -1.1% ) The DAX finished the week lower however we continue to see buyers hold this market up. This week should prove to be interesting heading into the first round of the French Election. VOLATILITY ALERT: German Flash Manufacturing PMI on Friday, 1st round French Election on Sunday . For a continued move to the upside we must see the DAX hold above 12198. Should this occur a break and close above 12381 sets up a scenario to retest the ALL-TIME HIGH’s at 12404. A strong break and close above this level could see a very quick move to 12714. If the DAX fails to hold above 12198, we will look for a move back down to 12044. A strong break below this level is likely to see a push further down into 11875, and if downside pressure is strong this week a sharp move down to the 11788 – 11754 area cannot be ruled out.
US SP500 – 2330 ( -25 or -1.06% ) Like the DAX the S&P continues to maintain its support levels, with this market again testing 2334 last week and holding to start the week. VOLATILITY ALERT: Yellen speaks on Tuesday, Monthly PPI and Prelim UoM Consumer Sentiment on Thursday, Monthly CPI and Retail Sales on Friday. For a move higher we must continue to see the S&P hold above our key level of 2334. Should this hold we will look for a move to 2376, and further breaks to the upside could see a retest of 2386. Should momentum to the upside remain strong, a move back up to 2400 cannot be ruled out. If we cannot hold above 2334, WATCH OUT for sharp move down to 2312. A close below this level could see further downside to 2292, and if momentum to the downside is strong we may see a fast move down to 2270. FOREX AUD/USD – 0.7578 ( +76 or +1.01% ) The AUD finally reached our big level at 0.7489 at which point we saw a quick reversal to the upside. Now the question remains- can the bulls sustain this rally from here? VOLATILITY ALERT: NAB Business Confidence on Tuesday, Unemployment Rate on Thursday. For a move higher we would like to see this market now hold above above 0.7561. Should this occur we will look for a retest of 0.7617. A strong break and close above this key level could see this market rally to 0.7677 before a pause. Should we reverse lower this week, a close below 0.7489 may result in a move down to 0.7447. Should we break strongly through this level, we cannot rule out a sharp move down to 0.7364 by the end of this week.
EUR/USD – 1.0610 ( +19 or +0.18% ) The EURO continues to hold above a VERY KEY LEVEL (1.0570). We have mentioned watch out ‘for a move to 1.0570 before a pause’, and this week we will look to see if this market can breakout of its tight weekly range. We will be discussing this in the MEMBER PORTAL this week. VOLATILITY ALERT: Euro area Flash Manufacturing PMI on Friday, 1st round French Election on Sunday . For a sustained move higher we must first see this market hold the very important level at 1.0570, followed by a break and close above 1.0631. Should this occur we may see a retest of 1.0738, and if momentum is very strong this week we will look for a move back up to 1.0814. If we cannot hold above 1.0570, we will look for a sharp move down to 1.0525. Should downside momentum remain strong we will look for a move to 1.0462, and if the market breaks this level- a retest of 1.0409 is our next downside target. GBP/USD – 1.2522 ( +152 or +1.23% ) The GBP is now at a potential DOUBLE TOP area and we are monitoring this market closely for an explosive breakout or reversal. We will be discussing this in the LIVE CHAT ROOM this week. VOLATILITY ALERT: Retail Sales on Friday. For a move to the upside we would like to this market hold above 1.2480. A strong break and close above this level could see a retest of 1.2622. If momentum continues and remains strong to the upside we will look for a move to 1.2720. If the GBP cannot hold above 1.2480, we will look for a move back down to 1.2297. A close below this level could result in quick move to 1.2240, and if this market continues to sell-off we will look for a move down to 1.2221.
USD/JPY – 108.60 ( -252 or -2.27% ) The $/YEN took a nosedive last week HOWEVER we have seen the first sign of a potential reversal to the upside of our key 108.31 level mentioned last week. Will the YEN reverse to the upside this week? We will be discussing this in the LIVE CHAT ROOM this week. VOLATILITY ALERT: Trade Balance on Thursday. For a move to the upside we will look for this market to hold above our key level at 108.31, followed by a strong break and close above 109.21. Should this occur we will look for a move back up to 109.94 before a pause. If momentum remains strong to the upside, we will look for a move to 111.09 before the week’s end. If we cannot hold above 108.31, the YEN may see further downside into 107.75. A strong break and close below this level could spell trouble for the YEN, with a very fast move down to 105.45.
COMMODITIES GOLD – 1287 ( +33.25 or +2.65% ) Last week Trump came out and said he would like to see rates to remain low and as a result the $US weakened as GOLD continued to rally. Like the YEN we have also now seen the first signs of a reversal to the downside in GOLD right at our 1294 level. For a continued move higher we would like to see this market hold above 1278, followed by a retest of 1294. A strong break above 1294 could see this market head back up to 1303, and if momentum remains strong we could see a move into 1313 before another pause. If Gold cannot hold above 1278, we will look for a strong move back down into 1263 and 1257. A break and close below this level could then result in a move to 1247 before the week’s end.
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