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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 5512
The ASX has continued to rally early in the week reaching a high of 5548 and breaking past the previous highs of 2 weeks ago. One thing to NOTE is that the ASX has closed 2 points higher than our upper level of 5510 mentioned 2 weeks ago.
For the up move to restart we would like to see an early break past 5536 reaching 5562. If the momentum is strong when it breaks through 5562 then we could see a further push higher towards 5704. Again this would need to be based on strong momentum.
If the down move restarts then we would like to see an early break back down past 5453 reaching 5424. Once this level is broken then we could see temporary support near 5367. If this level does not provide support and is broken with a long down bar then 5270 could be seen.
EUROPE
FTSE – 6694
The FTSE has made another attempt at moving higher over the past few weeks as the rally has taken it past an important level of 6657. The current move is close to the end of our FICM process and we have also noticed potential divergence forming.
For the up move to continue we would like to see a strong break and close past 6740 with a long up bar. Once this occurs we could see further moves towards 6805 potentially reaching 6848 which has been an area of resistance on 2 previous occasions this year.
For a down move to start we would like to see a solid break past the following 3 levels 6657, 6637, 6614 with strong downward momentum. If these levels are broken with long down bars then we could see 6524 reached once again.
DAX – 9416
The DAX rallied over the past few weeks but experienced some volatility along the way, moving 250+ points in a day. We would also like you to take NOTE that the Volumes on the way up for the DAX have been low, but as soon as the down moves occurred on Thursday and Friday of last week the Volumes picked up again. NOTE: Potential divergence forming.
For the upmove to restart after last weeks heavy volume down days, then we would like to see 9401 hold as a strong level of support followed by a move past 9447. Once this level is broken with strong upward momentum we could see 9509 reached. If the momentum continues strong past this level then we could see further extension towards 9735 – 62 area which would complete the range set back in DEC 2013.
If last weeks finish is any indication for this weeks start then we would like to see 9401 broken early in the week with a long solid down bar reaching 9365. Once this level is reached and broken then 9321 could be seen. If the downward momentum continues with heavy volume then the area between 9222 – 9201 will play an important role for the Index.
US
S&P – 1865
The S&P just rallied over the past few weeks, nothing seemed to phase it. Then came Thursday and Friday last week and down she goes. NOTE: The S&P has closed below a long term trend line dated back from 16 October 2012 (orange line – for our members).
For the S&P to break higher we would like to see an early break past 1870 reaching 1884, once this level is broken then we would like to see solid upward momentum break through the 1897- 1901 area before reaching 1915.
For the down move to continue then we would like to see an early break past 1854 reaching 1841. If the downward momentum is as strong as Thursday/ Friday then we could see 1812 tested again. If the S&P moves lower on heavy Volumes and 1812 is broken then we will discuss in our members area.
FOREX
AUD.USD – 9277
After moving higher a few weeks ago the AUD fell against the USD shortly after, indicating further indecision.
For the medium term up move to continue then we would like to see an early break back above 9337 followed by a strong push towards 9391. Once this level is reached and broken then we could see 9461 tested again with a possible extension towards 9491.
If the AUD continues its downward move then we would like to see 9226 broken early before reaching the area between 9181 – 76. If this area is also broken with strong downward momentum we could see 9116 followed by 9035.
EUR.USD – 13833
After a strong rally a few weeks ago the EUR is now in a wait and see mode. These types of situations are the making of large moves once a direction is formed. So be prepared. As the EUR has only closed 50 points below our previous brief then our comments remain the same, but caution should be observed with this pair.
For the up move to continue we would like to see a solid break and close above the highs in March of 13966, if this occurs we will discuss in our members area.
For the EUR to restart another move down then we would like to see 13805 broken early reaching 13786. Once this is broken we could see 13722. If 13722 is broken with a long down bar then we could reach 13685 and possibly 13589.
GBP.USD – 16796
The GBP moved sideways last week after a strong rally 2 weeks ago. It is now only 60 points above the last reports level, therefore our comments remain the same with a slight amendment. NOTE: divergence is forming on the current move and we have reached the range set back in NOV 2013.
If the GBP restarts a move higher then we would like to see a solid break past the high set in FEB 2014 of 16822 and 16841 set only one week ago. Once these are broken with a long solid up bar we could see 16914. If this occurs we will discuss in our members area.
If the divergence slows the up move and we see a reverse back down then we would like to see 16749 broken early in the week which could lead the pair to reach 16686. If the momentum is strong and we see a break past 16686 then 16537 could be next. If this is broken then it could lead the GBP down towards 16443. If the downward momentum continues strong then 16375 could be seen and possibly 16298.
USD.JPY – 10218
After seeing a large drop a few weeks ago the pair has been ranging sideways while the equity markets have been moving higher at a rapid pace. We have mentioned in the past that this pair has the potential to disconnect its correlation from the S&P at any time. We will be watching for this and if we feel it has happened we will make not in our members area.
If the USD finds strength then we would like to see a strong break above 10225 with a long up bar. Once this occurs we could see 10272. We would then like to see a long up bar (similar to the one on 08 April 2014, but in the opposite direction) breakthrough 10309 before pushing higher.
If a new downward move forms then we would like to see a break past 10194 towards 10116. Once this is broken we could see 10078. If we are to see a break past 100 again reaching 9977 then we would like to see 10078 broken with a long solid down bar.
COMMODITIES
GOLD – 1302
Over the past few weeks Gold was on its way to another strong rally until 15 April 2014 came along and a $40 drop stopped it in its tracks. Then we have a further drop followed by a rally on Thursday/ Friday as the Stock markets fall. We are watching this behaviour very closely as if this continues and the markets go back to Normal we could see strong buying/selling of GOLD before stock markets make a move. Take Note.
For GOLD to move higher from here then we would like to see 1319 broken early in the week followed by a long solid up bar breaking and closing past 1327. Once this occurs then we could see 1352. If we see further aggressive down moves on equity markets and GOLD becomes the safe haven of choice, we could see 1389 – 93 area reached very quickly.
If the down move restarts then we would like to see 1284 broken early in the week reaching 1269. As we saw last week GOLD bounced off 1269 (low 1268) therefore we would like to see this level broken with a long solid down bar extending towards 1246.
US LIGHT CRUDE OIL – 100.62
We saw OIL slow down the previous week followed by a move lower last week closing just above $100 and just below our FICM level of 100.85.
For the upmove to continue then we would like to see a strong solid break and close past 100.85. Once this occurs then we could see 101.90. If the upward momentum is strong and we break 101.90 then we could see 102.76 reached. If we see 102.76 broken then OIL could settle near 103.93.
If 100.85 proves to be a solid level of resistance and the down move continues then we would like to see 100.06 broken early in the week with a long solid down bar. Once this occurs then 99.34 could be tested. Further downward momentum could drive OIL down towards 97.43 and even extend to 96.99.
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