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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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AUSTRALASIA
ASX – 5239
The ASX made an early move up last week and reached a high of 5311 which was only 12 points short from completing the full range. It faded back down to close below a new important level of 5252 and is now in a potential slowdown process.
If the up move is to continue, then we would like to see a solid break with a long bar through the range high of 5323 which could then lead the ASX towards 5442.
For a down move to restart, then we would like to see 5252 become a solid level of resistance followed by a break past 5164 – 25 area before reaching 5083. If 5083 does not provide support, then we could see the ASX dip below 5000 again and settle near 4983.
EUROPE
FTSE – 6576
The FTSE had a mixed week as it stated higher but then wasn’t able to hold it’s ground as it moved lower after FICM indicated a slowdown process. It too has closed below an important level of 6598.
If the upmove is to restart then we would like to see 6598 broken early in the week with solid upward moves. Once this occurs then we would like to see a break past both 6667 and 6699 with long solid up bars before reaching 6740. Once this level is reached then we will revise.
If 6598 proves to be a solid level of resistance we could see the start of a reversal to the downside. Further confirmation of this could occur if 6531 and 6483 are broken early in the week followed by a break below 6420 could see 6358.
DAX – 8651
After taking the lead last week the DAX continued forward closing well above the highs set in May. The DAX is known for its early moves and from time to time you will notice the slight over extensions it creates.
If the DAX is to continue higher and reach its full range of 8883, then we will need to see 8607 hold as a solid level of support followed by an early move up past 8771, which could lead it to reach and potentially overextend past 8883. If the momentum is strong, then we might even see the DAX move above 9000.
If the DAX takes a breather and falls back down, then we would like to see 8607 broken early in the week followed by strong downward momentum past the 8462 – 8428 area before reaching 8340. If this level is broken with further momentum then 8139 could be reached.
US
S&P – 1711
The S&P provided a 20 point gap on Wednesday after the Fed decided to continue with its monetary policy. But the markets have a way of forcing the hand of regulators and policy makers and it could not continue higher and closed 20 points lower from the highs.
For the move continues higher we would like to see 1707 hold as a strong level of support and then we would like to see 1733 broken early in the week with long up bars before attempting to reach the full range set back in June and settle near 1773.
If we are to see a reversal then a solid break past 1707 could lead the way to 1680. If there is no support at this level then 1661 – 1658 could be the decider as now this is the bottom end of the longer term upward channel. If this is broken then a new long term direction could start.
NASDAQ – 3225
The NASDAQ is behaving similar to the DAX, it moves in one direction early and doesn’t look back. At the moment it is continuing to move higher despite any outlook by the other Indices.
If this upmove takes full effect, then we would like 3200 to hold as solid support before a move past 3275 occurs. If the momentum is strong then 3373 would be the next ambitious target.
If 3275 proves to be difficult to break then a move back down could see the NASDAQ break past 3200 and reach 3147. If this level does not hold then 3095 could be seen.
FOREX
AUD.USD – 9392
The AUD also made a solid move up after the Fed announcement, and reached a high of 9528 before closing 130 points lower. The next week will be a good test for the AUD, and the question is, can it stay above 9395?
For this new uptrend to continue we would like to see the AUD hold the 9395 level followed by a new break past the highs of 9528. If this occurs with solid upward momentum then 9600 could be next.
If a new downtrend restarts, then we would like to see another solid break past 9376 followed by a strong move past 9293. If this occurs then we could see 9210 and eventually find some support near 9119.
EUR.USD – 13519
The EUR continued its move higher as the USD was disadvantaged by the Fed announcement, at least in the short term. The EUR has now entered into a potential slowdown process as it has reached its full range set back in July.
If the move up is to continue, then we would like 13568 broken early in the week followed by strong upward momentum past the highs set in Feb of 13711 before the new longer term uptrend can restart.
If the slown down process takes full effect then we could see 13432 reached, and if broken, then 13347 could provide some support. If not, then we would look for 13175.
GBP.USD – 16002
No slowdown here, the GBP has been moving higher and has ignored all before it. The Fed announcement on Wednesday did help push it past 16100 and 16100. Even so, this was short lived and has closed below two important levels of 16099 and 16067.
If the up move continues, then we would like to see a retest of 16067 and 16099 followed by a solid break with long upbars past 16162 which was the high set last week. This could then lead the GBP to head towards an ambitious level of 16492.
If the rally is over and we see a reversal, then we would like to see 15924 broken early in the week followed by a solid move towards 15795. If this is then broken we will be looking for 15596.
USD.JPY – 99.25
Another week of 200 point moves up and down for the USDJPY pair in both directions. There’s no real direction as both the US and Japan are in a bit of a lingering economy. Japan for 15+ years, the US for 6+ years.
If we are to see a 200+ point move this week (all in one direction), then we would like to see 99.92 broken first followed by a solid break back above 100.52, which would lead the way towards 101.43. If we then see another 100 point move up we could see the USDJPY finding 102.51 as its next level.
If the down move has started then further breaks past 99.18 and 98.67 would see 97.95 and even 97.55 reached in a very quick time frame.
COMMODITIES
GOLD – 1324
Last week it briefly looked like GOLD was coming back to its former glory to become everyone’s favourite after the Fed announcement, but that was short lived, as the reality of a reduction of funds remains. It’s just a matter of time which should strengthen the USD.
If GOLD has any chance of moving higher again, then we would like to see a sharp reversal back up through 1391 and a close above 1439 before reaching an ambitious level of 1475.
If this is the start of another move down, then we would like to see 1333 become a solid level of resistance before a move past 1282 is attempted. Once this is broken then 1255 could be reached very quickly, before coming to potential support near 1223.
US LIGHT CRUDE OIL – 104.82
OIL fell out of favour last week and has dipped into the Standard Deviation Channel and closed near the middle channel line.
For the up move to restart we would like to see 107.04 – 84 area broken with solid upward momentum. Once this occurs then we could see 110.23. If we see a breakthrough 110.23, then we could then see the high of 112.20 tested.
If we see a further downside move, then we would like to see a break past 103.53 with long down bars followed by a breach of the lower Standard Deviation Channel near 102.20, which could then lead OIL to reach 100.79 and then possibly find support near 99.48.
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