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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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We may take multiple trades throughout the week. Currently Trade View is Light Net Short.
AUSTRALASIA
ASX – 5313
The ASX has been going sideways this year with 5367 (FICM level) restricting any further moves higher.
If we are to see a continuation of last years late rally then we would like to see solid breaks past both 5334 and 5367 before an attempt is made to reach 5424. Once this level is reached we will reassess.
If 5367 continues to play its part as a strong resistance level then a break below 5303 could see 5276 reached quickly. If this is then broken with solid long down bars then 5200 could be reached.
If the downward momentum is strong and 5200 is also broken we could see a push down towards 5144 – 25 area were the ASX might see some support.
EUROPE
FTSE – 6759
The FTSE followed the direction of the other world indices last year with a late rally and is now moving sideways. One level we will be watching closely is 6740.
If 6740 holds as a strong level of support and the FTSE pushes higher than we would like to see 6819 broken with solid long up bars before a push towards 6906 is achieved. This will then complete the range set in Oct 2013.
For the down move to start then a strong break below the 6740 – 23 area could be the start. Once this is done we could see 6657 reached. If the downward momentum is strong then a break past 6657 could see 6607 and possibly 6520.
DAX – 9502
The DAX overextended its up move during the last weeks of 2013 and this was evident with a 250 point drop on the first trading day of 2014. Now it has settled somewhat in a sideways move.
For the DAX to once again move higher we would like to see a strong break with long up bars through the area of 9627 – 9644. This area is important for 3 reasons:
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It is the highs of 2013
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It is the bottom of the Standard Deviation Channel
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FICM range completed.
All 3 are strong indicators of resistance. But if the break does occur then we could see 9799 reached.
If the DAX finds the area of 9627 – 44 difficult to break then a break lower past 9490 could see 9392 reached. If this is then broken with momentum then we could see 9294.
US
S&P – 1843
After closing 2014 at 1847.80 which was within our range mentioned in our last report in 2013 we have seen the S&P move sideways since. We are at an interesting junction for the markets as the Fed has started reducing it purchases and on Friday we saw the jobs numbers come in worst than expected. The markets are now trying to work out what the next move will be.
Once again we have reached all time highs and if we are to see any further moves higher we would like to see a solid break past 1845 – 48 before we could see 1867. If this move is strong then the full range which was set back in June – July 2013 could be reached with an ambitious level of 1901.
For a down move to start the highs of 2013 need to become a solid level of resistance and if so then a break below 1836 could see 1820 reached. If this downward momentum is strong then 1805 could be seen.
FOREX
AUD.USD – 8994
The AUD has been moving sideways since December 2013 as the RBA is a bit unsure whether it should cut interest rates or not.
For a new upmove to start we would like to see an early break past 9064 followed by a solid break past 9110 which could lead the pair to reach 9182.
If the long term downtrend restarts then we would like to see 8924 broken followed by a solid break with long down bars past 8838 , this would then put the AUD back into the long term Standard Deviation Channel. If the downward momentum continues past this point we could then see 8717 reached.
EUR.USD – 13666
The EUR has settled back down this year from the highs in DEC 2013 of 13893 as the USD is showing signs of strength and the possible rate cut by the ECB looming
For the EUR to continue upward we would like to see 13721 broken with a long solid upbar. If this occurs then the push higher could see the Dec 2013 highs of 13893 tested. Once this level is broken we will revise. If this is done during the week we will discuss this in our members area.
If the USD continues its strength then a move down on the EUR could be seen if 13605 is broken followed by a long down bar through 13564 reaching 13515. If this does not provide support then 13432 could be next.
GBP.USD – 16478
The GBP has become one of the most stubborn currency pairs against the USD as every time it moves down it tends to find strength again very quickly and we have seen this happen on a number of occasions. The most recent drop was on the first trading day of 2014.
If the GBP takes another leg higher we would like to see strong long up bars through 16573 followed by a move up to 16705 which would complete the range.
For the down move to restart, we would like to see an early break past 16441 – 11 area which could then reach 16351. Once this level is reached if the downward momentum is still strong then we could see 16269 reached and possibly 16227.
USD.JPY – 10414
After reaching our target of 10543 mentioned in our previous market brief the USD has lost ground against the JPY falling over 100 points. We will be watching this pair for any sharp moves.
If the USD continues its strength, then we need to see a solid break past 10467 before a new attempt is made in reaching and breaking 10543. Once this level is broken we could see a possible extension to 10632..
If Fridays 100+ point down move is to continue this week we would like to see 10379 broken early, this could then lead the pair to reach 10251. If 102.51 is broken again with long solid down bars, then we could see a downward move restart.
COMMODITIES
GOLD – 1248
GOLD continued lower towards the end of 2013 but found support near the lows of June 2013 at 1182 then bounced back through 1200 again.We mentioned in our last brief that we will be watching GOLD closely as it has the potential to make dramatic moves quickly, either up or down.
If GOLD continues higher from here we would like to see a strong break past the area of 1269 – 82 before we see GOLD back into 1300 again. Once this is reached than 1320 and 1351 could be the next possible targets.
If the down move continues, then a solid break past 1222 and 1212 early in the week could lead the way for GOLD dipping below 1200 again and reaching the area of 1182 – 80.
US LIGHT CRUDE OIL – 92.79
OIL found its upward momentum towards the end of 2013 by reaching a high of 100.73 after seeing a low of 91.75 in Nov 2013, but 2014 has started very differently with OIL reaching the NOV lows within a few weeks. FICM (Trade Views primary mathematical model) is also indicating a potential slowdown of the current move.
For OIL to restart its move higher then we would like to see 9347 and 9456 reached and broken with long solid up bars . If achieved this could then push OIL back up to 9696.
If the current down move continues then a break below 9217 could see 9146 and if this is then broken by a long down bar then 9018 could be reached. If the momentum is strong when 9018 is broken then we could see the start of a new more sustained downward move.
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