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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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.
AUSTRALASIAN SESSION
ASX – 4864
The ASX attempted several times to break through 4983 but found solid resistance, then eventually took another leg down breaking through 4903.
If the down move continues with momentum past the short term level of 4847, then we could see 4719 reached and possibly become support. But if it’s broken early in the move then 4500 could be the next level.
If 4847 provides a level of support then we could see an up move towards 4903 again, and if broken then possibly 4954.
EUROPEAN SESSION
FTSE – 6540
The FTSE made another move down last week after an initial attempt higher on Tuesday, but was stopped at 6791 which was only 5 points away from our potential resistance level mentioned last week.The FTSE followed the downward trend of other world indices, and although the current move is indicating further drops, it has stopped near March’s high of 6550.
For this down move to continue we would like to see it early in the week and continue with long bars down through 6502 and 6424 before targeting 6306.
If an upmove is to be considered then a bounce needs to occur now with solid up moves, otherwise we could see potential short term resistance near 6583 and 6628. We would like these levels broken before looking for an upside target from here.
DAX – 8304
The DAX moves have been tamer than the rest of the markets and this indicates that caution should be taken. The DAX usually overextends its moves but in this case it has not made the aggressive move down, which could indicate that there is more to come or that the other indices have just gone the wrong way.
If this down move is to start this week then it needs it to start early and if so then a solid move to 8003 would not be surprising.
If however the DAX is building towards an up move then a bounce from here will need to break through 8404 before moving back toward the highs near 8550.
NOTE: We will be watching the DAX with caution and look to make the most of its moves this week.
US SESSION
S&P – 1628
The S&P made another move down last week and closed on its lows which indicates a possibility of further down moves.
If the down move is to continue, the levels that need to be broken are 1611, then 1597 before potential slowdown near 1547. But this level will only be reached if the momentum on the way down is strong enough, otherwise the first two targets could supply the support needed to bounce back up.
If the bounce occurs off 1611 or 1597 then we could see some resistance around 1646, and then 1657 areas before moving towards previous highs of 1687.
NASDAQ – 2977
Even though the NASDAQ closed lower this week it was only by 20 points, which could indicate a similar pattern to the DAX, as no real down movement occurred.
If the NASDAQ decides to catch up to the rest of the world and take a leg down, then the move could be strong enough and overextend to a level of 2784. For this to happen we would need to see other world indices take another leg down and drag the NASDAQ with them seeing the 2960 levels broken with real momentum.
Otherwise, a bounce from here or off 2961 could be the launching pad for a move back past 3000 with short term resistance around 3021 before reaching 3044 and making another attempt at 3092.
FX MARKETS
AUD.USD – 9567
The AUD made another small move lower last week. 9580 has played its part and slowed the aggressive down moves. When the market reached this level we saw daily swings of around 100 points both up and down which could be the signs of a slowdown faze.
For this to occur we need the pair to consolidate around these levels with small up moves. This will be challenging as we see short term resistance at 9620 and 9680. If these levels are broken we could see a new upmove forming.
If the downward momentum continues past this area then we could be heading towards 9387.
EUR.USD – 12995
The EUR is still stuck as the move above 12927 got to a high of 13061 and then back down again.
For any real move to take place we would like to see 12769 broken on the downside and 13085 on the up. Otherwise short term plays are in.
Short term levels we are looking at are 13054 on the up and 12940 on the down.
GBP.USD – 15193
The GBP’s down move slowed near the 15008 level and made another attempt at breaking past 15184 before closing 10 points above.
If the up move is to continue then 15184 needs to hold and 15224 needs to be broken early in the week before an attempt at 15325 is made.
If 15184 proves to be resistance and the downward move continues, then we would like 15137 broken before an attempt at breaking through 15008 is made.
USD.JPY – 10042
The JPY continued its strength last week and closed below our target level of 10087, partially assisted by aggressive down moves on some of the world markets, as mentioned in last week’s market brief.
If this is to continue, then the same elements need to occur – a further weakness in the world markets followed by strong down moves, the JPY could then strengthen further and if we break below 9993 we could see 9826.
If this down move slows down near 9993 and a bounce occurs, then we would like to see 10095 broken before further moves towards 10229 are made.
COMMODITIES
GOLD – 1387
Even though GOLD broke through 1398 and made an attempt to stay above 1400 last week, it still found it difficult to break above 1421 and closed only 1 point higher than last week’s close.
Now that we are back to 1387 this could show that the negative sentiment on GOLD has not entirely disappeared, and if 1372 is broken this week then we could be in for a ride on the way down. Once again no attempt on downside targets will be made.
But if we see a bounce of this level then we would like to see a continuous break through 1398 followed by 1411 and 1421 before and attempt at 1476 could be made.
US LIGHT CRUDE OIL – 9161
LIGHT CRUDE last week was uncertain of its direction, as we had an early upmove which was stopped by our resistance level of 9582, with a high of 9590 followed by a late down move. When indecision or price volatility is rampant in the markets then trends are in question.
Although LIGHT CRUDE keeps repeating the same levels week after week, the plus side is that this pattern opens opportunities for range trades.
As 9346 has been broken, if the down move continues then we could see 9019 again.
If this upward move is to occur then we would like to see 9346 – 68 broken and hold before 9744 is reached again.
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