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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 5163
The ASX continued its move lower pushing through 5200 with ease with a 100+ point down day.
For a rebound to occur and the ASX starts to move higher we would like to see a push past 5200 area once again with long solid up bars. This could then see 5240 – 68 area reached. Once this area is also broken then we could test 5367 once more.
For us to see a continuation of this downward momentum we would like a clear break past 5144 – 25 area. If this is achieved with long solid down bars then we could see 5054 reached and if the momentum continues then 4983 could be the next level tested.
EUROPE
FTSE – 6600
After a solid start last week we saw the FTSE give up all its gains for the past month with a 200 point down move on Friday to close only 7 points lower than one of our lower levels mentioned last week.
For the FTSE to restart an up move then we would like to see a solid break early in the week back up above 6656 which could then help it reach 6705. Once 6705 is broken then 6740 will once again play an important role moving forward.
For the down move to continue on from last week we would like to see an early break past 6563 followed by a long down bar past 6527. This could then lead the FTSE to reach an all important area between 6433 – 6395 as FICM our primary model is showing potential levels of support.
DAX – 9320
After a sideways move early last week the DAX showed its hand by dropping by 300+ points which would test any analysis that Germany was one country in the EU performing. Unfortunately the markets are correlated and Germany is no exception to the rule.
If Fridays down move was just a blip in the DAX’s radar and the DAX does lead the markets higher than for the up move to restart we would like to see a solid move up past 9376 which could then lead it towards 9473. If this level is then broken with long solid up bars we could see 9556 reached.
The rest of the world did not follow the DAX higher and we did see a down move. For this aggressive down move to continue we would like to see 9294 broken early in the week followed by a strong break past 9223. Once this occurs we could see 9113 reached. If the momentum is really strong then we will be monitoring 9000 – 8959 area closely as if the DAX does not find support here then we could be in for a prolonged downward move which could last another 500 points or so.
US
S&P – 1786
After a few attempts at breaking through 1848 – 50 the S&P gave up and conceded on Thursday and Friday by dropping a total of 63 points which in anyone’s language, “That’s a lot”.
For the S&P to restart its push higher from last weeks heavy hit than we would like to see solid break early in the week and with strong momentum past 1805. Once this occurs then we need to see a break and close above 1820 – 32 area. Once this is achieved then 1848 – 50 could once again be tested.
If we are to see a continuance of last weeks down move than we would like to see a solid break past 1777 early this week followed by a break and close past 1760. Once this occurs then 1740 – 29 area could be next to fall leading the way towards 1707 which could provide potential support. If not the 1600 here we come.
FOREX
AUD.USD – 8679
As mentioned last week, if the RBA is unsure whether to cut interest rates or not after the bad job numbers in December, maybe the markets need to try harder in assisting with the decision?
For a new up move to start we would like to see a solid break past 8893 – 8924 area.
As the AUD is back inside the long term Standard Deviation Channel and the down move continues then we would like to see a break past 8582 before reaching 8530. If the downward momentum is still strong then we could see 8454 reached.
EUR.USD – 13673
The EUR remains strong which could indicate foreign Investment into the region as it is believed that the Eurozone is recovering.
For the EUR to continue higher we would like to see 13701 broken early in the week followed by a strong break and close past 13742. Once this is achieved the EUR could once again test the 13808 area and potential push higher.
If the USD regains its composure and finds strength again then we would like to see 13650 broken early followed by a break past 13603. If this occurs then 13564 could be the next level tested and if broken then 13515 could be reached. If no support is found here then we could see 13433 provide temporary support.
GBP.USD – 16475
The GBP rallied strong early last week in anticipation of a Interest rate rise but then came Friday and we saw a 193 point move down. Now if the GBP is true to its previous ranges then a solid bounce could occur, which is what was seen previously.
If the GBP does bounce back from last weeks large down move then we would like to see a solid break past 16516 which could lead the pair towards 16576. If this level is then broken with solid momentum then we will be watching the area of 16634 – 68 closely and if reached a revision will need to be made depending on the strength of the move.
If Friday was the start of something bigger than for the down move to continue we would like to see 16409 broken which could then lead the pair to 16389. If this level is then broken we could see 16329. If the downward momentum continues strong through 16329 then 16227 could be the last level for potential support before the pair moves into a new phase down.
USD.JPY – 10225
As the equity markets fell so did the USD against the JPY by almost 300 points in 2 days. We will continue to watch this pair for further sharp moves.
If the USD finds strength this week then we would like to see 10250 broken early with a long solid up bar before reaching 10329 – 46 area. Once reached we will be looking for a solid break and close past this area before the pair reaches 10429.
If the equity markets continue to move lower and the JPY is the safe haven of choice then a solid break past 10150 could see the pair near 10078 – 52 area very quickly and possibly a dip below 100 level.
COMMODITIES
GOLD – 1269
With the world markets seemingly breaking down GOLD might still become the safe haven that once was. After all have given up on GOLD it might start to prove them wrong. Remember GOLD is a physical item which can be purchased and when financial money systems break down where else can you put your money? Under your pillow?
For GOLD to move higher from theses levels we would like to see 1268 hold as a strong level of support followed by a solid break and close past 1282. Once this occurs than 1320 and 1351 could be the next possible targets.
If GOLD finds it difficult to break past 1269 – 82 area and the long term down move restarts then we would like to see a break past 1252 followed by a long down bar past 1231 – 27 area before reaching 1212. Once this occurs we will revise.
US LIGHT CRUDE OIL – 9684
OIL continued its upward momentum this time reaching our upper level of 9745 with a high of 9777.
For OIL to continue its move higher then we would like to see 9699 broken early in the week followed by a solid break and close with a long up bar past 9744. Once this occurs then 9803 could be reached. If the upward momentum continues strong then a break past 9803 could lead OIL back to 9935.
If 9696 – 9745 becomes a solid level of resistance and we see a move back down then we would like to see 9624 broken early in the week with long down bars. This could then lead OIL to reach 9561. Once this level is broken then we will watch for potential support near 9470 – 55 and if it is not found then 9346 could play that role.
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