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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 Net Short.
AUSTRALASIA
ASX – 5403 ( – 68 or – 1.24% )
The ASX saw a downward move last week reaching a low of 5368, which was only 1 point above our FICM level of 5367, this level has played a major role in holding up the ASX over the past few months. That is why if the ASX breaks out of its ranging behaviour, the move will be quick.
For the up move to continue then we would like to see 5367 remain as a strong level of support followed by a strong push back above the area between 5415 – 47. Once this is broken then 5495 could be seen again. If the momentum is strong when it breaks through 5495 then it could reach 5562 again before slowing down temporarily.
Last weeks down move entered the first phase of the process, for it to continue we would need to see a strong break and close below 5367. This could then accelerate the move down towards 5270 with a possible extension down to 5201. If the momentum is strong then we could see 5177 reached were the ASX might find some temporary support.
EUROPE
FTSE – 6777 ( – 99 or – 1.44% )
The FTSE struggled to break the highs and that was enough for it to move down. The basic rule in trading is that if the highs are not broken with momentum then they won’t be broken as you will notice over the past few months. The FTSE is now at the early stages of a downward move.
For the up move to restart we would like to see strong early breaks past both 6790 and 6851 before another attempt is made at breaking past both 6878 and possibly 6904. This will then complete the range set back in OCT 2013. The FTSE will need the the rest of the world markets also moving higher.
For a downward process to take effect we would like to see 6790 become a solid level of resistance before moving down towards 6723. If the downward momentum is strong and 6723 is broken with a long down bar then 6632 could provide some level of support.
DAX – 9904 ( – 108 or – 1.08% )
The DAX reached another all time high last week of 10034. This level fell between the 10021 – 75 target we mentioned on the DAX over the past few weeks. The initial Euphoria of QE by the ECB might have been seen to be a good thing and pushed the DAX to new all time highs before falling below 10000 level again, but lets put it into perspective (real world perspective).
- If there is nothing wrong then why stimulate? There must be significant underlying problems if you need to stimulate.
For the upmove to restart we would like to see an early break back up past 9930 before another attempt is made in breaking the area between 10021 – 75. Any strong break past this area will be discussed in our LIVE CHAT ROOM.
Last weeks down move started a new process, for this to continue we would like to see 9930 hold as a strong level of resistance. Another strong beak past 9865 is needed to reach 9750. Once 9750 is also broken then further downside moves could continue if 9667 followed by 9580 which could provide the first level of support.
US
S&P – 1936 ( – 14 or – 0.72% )
Another all time high for the S&P last week of 1955 and then a 1% drop. With GDP downgrades and companies reducing staff (IBM for eg) – but wait, IBM has been buying back its own shares, that must mean things are going great? Then why reduce staff? Hmmmmmmm.
IF IT LOOKS LIKE A DUCK, SWIMS LIKE A DUCK, QUACKS LIKE A DUCK, THEN IT’S PROBABLY A DUCK.
For the S&P to restart the move higher then we would like to see an early break and close back above 1938 followed by another attempt at a new all time high breaking 1955. Once this occurs the next projected level is 1993. We will however be discussing the moves in our LIVE CHAT ROOM.
The down move is now in the early phase of the process and for it to continue we would like to see 1938 act as a strong level of resistance followed by a strong break past 1926 – 1915 followed by strong downward momentum past 1900 leading towards the 1882 – 76 area.
FOREX
AUD.USD – 9400 ( + 64 or + 0.69% )
The AUD moved higher last week pushing past the all important 9423 area on Thrusday with a high of 9437, but was unable to stay above it for long. It made a second attempt on Friday to only find further selling pressure near that level. “It is still range bound and the 2 FICM levels we are looking for before a significant move occurs are 9203 and 9423. Until these 2 key levels are broken our comments from last week remain the same.”
For the move higher to continue we would need to see an early break and close past 9423 before the potential to reach 9539 could occur. Once this is reached the AUD could start a new phase and potentially new up trend.
If the USD finds strength and 9423 proves to be difficult to stay above, then a move past 9333 could reach 9287. If the downward momentum is strong then we would like to see a strong break and close past 9287 reaching 9203 were the AUD might find temporary support.
EUR.USD – 13540 ( – 102 or – 0.75% )
The EUR moved lower early last week but then took a breather towards the end. Its only a matter of time before we see whether or not the ECB made the right decision.
@BIG PLAYERS (Banks, Large firms) just incase you misunderstood – MARIO DRAGHI WANTS YOU TO CREATE JOBS, JOBS, JOBS.
If the EUR was to strengthen then we would like to see 13590 broken early followed by a further break past 13669. Once this level is also broken we could see the EUR back near 13713.
For the EUR to continue last weeks down move we would like to see a strong break and close below the area between 13482 – 72 with a long down bar. Once this is reached we could see 13392. If the downward momentum is very strong we could see 13293 followed by an ambitious level of 13163 reached.
GBP.USD – 16963 ( + 163 or + 0.97% )
Another slow start for the GBP, but this time the move higher has some serious momentum behind it reaching a high of 16991 which was only 5 points lower than the high in MAY.
If the GBP makes further moves higher then another break past 16996 would most likely see it push past 17000 level. If the momentum stays strong then we could see 17105 reached.
If the 17000 proves to be an elusive figure for the time being then a move down past 16908 could reach 16854. Further down moves past this level could reach 16767 and 16731. If the momentum is strong this could lead the pair to reach 16663.
USD.JPY – 10204 ( – 45 or – 0.44% )
This pair is currently trading in a range where most of the trading has been between 102.70 and 101.52 since FEB 2014. We have seen some spikes above and below but until a clear direction is formed our comments will remain the same week in – week out.
For the USD to move higher we would like to see an early break past 10309. If the momentum is strong then we could see 10356 reached. This level will then need to be broken with a long solid up bar before we see 10410.
If we see another downward move then we would like to see an early break past 10180 followed by further strong breaks past the area between 10169 – 10152 leading the pair to reach 10052. If 10052 is then broken with a long solid down bar we could see 9977.
COMMODITIES
GOLD – 1277 ( + 27 or + 2.16% )
Last week saw interesting gaps up in GOLD, once they started to occur we also saw the equity markets move lower. If we see a shift from complacency in this market turning to panic GOLD might find strength as a safe haven once more.
For the upward move to continue higher we would like to see an early break and close past 1282. This could then lead GOLD to reach 1295. Once again further breaks higher will need to occur with strong long up bars reaching 1315 and then finally reaching 1330.
If the down move restarts then we would like to see an early break past 1274 reaching 1264. Once this level is also broken we could see GOLD testing 1252 once again.
US LIGHT CRUDE OIL – 106.73 ( + 399 or + 3.88% )
OIL exploded higher last week with the IRAQ conflict escalating. The one thing to note that moves like this are event driven, so when the event circumstances cool, then the move reverts back to previous levels. Caution should be taken if you decide to chase explosive moves.
For the upmove to continue then we would like to see another early break back above 107.21 with strong upward momentum reaching 108.92. If this level is broken and the conflict continues to escalate then the previous highs of 112.20 set back in AUG2013 could be tested.
If the conflict cools down and we see a down move start then we could see OIL back down near 104.02 – 103.49 area where it might find some temporary support, but if the sell off is strong then we could see OIL breaking past 102.29 reaching 101.28.
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