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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 5427
After a strong start early in the week we saw the ASX fall by about 100 points before regaining its strength to close slightly lower. Therefore our comments remain the same as last week. A slowdown phase has occurred, the question now will be if the ASX reverses its upward momentum.
For the up move to continue we would like to see and early break past the previous highs of 5494 (reached last week) with a long solid up bar. Once this occurs we could see 5553 reached. If this level is also broken with strong upward momentum then we could see an extension towards 5777.
For the slowdown to take full effect and a down move restarts then we would like to see a strong break and close through 5366. Once this occurs then the area between 5271 – 37 could be tested. If broken then 5200 could be reached and if the downward momentum is strong then the ASX could find potential support near 5144 – 25.
EUROPE
FTSE – 6804
The FTSE also had another burst higher early in the week but to find itself go back down by 150+ point before closing only 1 point lower. Therefore our comments remain the same as last week. Note, it is finding it difficult to stay above 6847 which was one of our FICM levels mentioned previously.
For the FTSE to continue its up move we would like to see a solid break and close above 6847 early in the week followed by a push towards 6903. Once this occurs then we would like to see 6903 broken with similar momentum followed by a push towards 7036 which would then complete the range.
For the down move to restart then we would like to see an early break and close past 6740 with a long solid down bar. Once this occurs then we would like to see another strong break past 6656 which could then lead it to reach 6563. If this level is also broken with solid downward momentum then the FTSE could be looking for support near 6433 – 6395 area as FICM our primary model is showing potential support levels.
DAX – 9649
The DAX is well and truly in its slowdown process as mentioned a few weeks ago as once again bucking the trend of the world markets by moving sideways and closing only 28 points higher. Some slight mathematical amendments on the levels.
For the DAX to continue higher from these levels then we would like to see a solid start to the week where the DAX reaches 9756 with a follow through reaching 9785. This will then complete the range set back in Dec 2013. Once this is achieved then we will revise accordingly.
If the slowdown takes full effect and the DAX cannot complete the range and restarts its down move then we would like to see an early break past both 9617 and 9554 followed by strong momentum break past 9431 and 9401 reaching 9388. Once this occurs the two levels we will be watching closely will be 9222 and 9113 depending on the speed of the down move.
US
S&P – 1862
The S&P has now broken past last years highs which was an important milestone for the Index. The only question in traders minds is, What was the reason? Was it technical ( a break past previous highs) or was it fundamental (strong growth data)? It seems to be technical for the time being as the fundamental data is just not there. Once a technical break occurs then it needs to be followed up by fundamentals otherwise it might not hold those levels for very long.
For the S&P to continue the move up we would like to see the area between 1875 – 80 broken early in the week which could then lead it to reach 1900. Once this is reached and if the momentum continues strong then we could see 1913.
If the technical break does not follow through and we see a move down then we would like to see a solid break past 1839 early this week followed by a continuation through to 1818. Once 1818 is broken the we could see 1805. If the down move has strong momentum then we could see 1794 reached.
FOREX
AUD.USD – 8924
After starting higher last week the AUD once again found it difficult to hold ground as it fell back down to close on our FICM level of 8924 mentioned in previous weeks.
For the upmove to restart and form a new trend we would like to see an early break past 8970 followed by strong moves past both 9058 and 9114 before attempting to reach and break 9188. Once this level is reached and broken then we could see 9210 reached.
If the AUD restarts the longer term down move then we would like to see 8873 broken early in the week which could then lead the pair towards 8813. For the next push lower we would like to see 8813 broken with strong momentum before reaching 8738 where it might find some temporary support.
EUR.USD – 13801
We say indecision when we talk about this pair as it will move lower during the week and then pop, we see a 100+ point rally in one day. As mentioned last week we will be watching this pair very closely for further sharp moves.
Now that the EUR has reached 13805, before another attempt is made to push higher we would like to see the previous high of 13893 (set back in Dec 2013) tested. If this occurs then we might see the EUR near 13938 and possibly touch 14000 once again.
For the EUR to move lower then we would like to see a strong early break past 13734 before reaching 13685. We would then like to see solid long down bars break 13625 reaching 13589.
GBP.USD – 16739
After a sideways move during the week we saw the GBP rally 100 points on Friday. Just like the EUR we will be monitoring this pair very closely as we believe sharp moves will be ripe.
If the GBP continues its strong move higher we would like to see it break back through 16747 with a long solid up bar. If this occurs early in the week and the momentum continues then we could see 16914. Once this level is reached we will look to revise.
If the GBP does start a downward move then we would like to see 16676 broken early in the week before reaching 16537. Once this is reached we would like to see a long down bar break 16445 before reaching 16295. If the GBP does not find support here then 16070 could be reached.
USD.JPY – 10178
Once again the USD lost ground against the JPY due to uncertain global events. As mentioned last week we anticipate some Volatility to come into the markets therefore we will be watching this pair closely.
If the USD continues to find strength then we would like to see 10219 broken early in the week before reaching 10261. Once this occurs we could then see 10353 reached. If we are to see a continuation of the up move we would need to see a long up bar break through 10353 before reaching 10429.
If the down move restarts then we would like to see 10113 broken early reaching the area between 10078 – 52. If the downward momentum continues strong and this level is broken with long solid down bars then we could see 9978 reached. If 9978 is also broken with strong momentum we could see the pair reach the area between 9881 – 63 where it might find some support.
COMMODITIES
GOLD – 1326
Once again Gold made initial moves higher but to see it move back down to only close up by 2 points. Therefore our comments remain the same as last week. NOTE: some divergence is forming.
For GOLD to continue higher we would like to see last weeks momentum continue with an early break past 1351. Once this occurs then 1391 could be reached. We will revisit GOLD upper levels once 1391 is reached as GOLD might find some resistance.
FICM, which is our primary model has indicated a potential slowdown near current levels. If the slowdown does occur and we see GOLD reverse back down then we would like to see an early break down past 1313 which could lead ot to reach 1299. The move down could be short lived as GOLD could find support near 1269 – 82 area.
US LIGHT CRUDE OIL – 102.34
Last week we saw another sideways move for OIL which closed only 31 points higher. Therefore our comments remain the same as last week. We will be watching OIL closely for signs of a break over the next week or so.
For OIL to continue its move higher we would like to see another attempt at breaking and closing above 102.70 early in the week leading it towards 104.07 with strong momentum and long up bars. Once this occurs and if the momentum is still strong we could see 106.19 reached with an extension towards 107.21.
For a down move to restart then we would like to see OIL break back down below 101.99 and 101.31 with strong momentum which could see 100.91 reached. Once this level is broken then we could see another push below 100 reaching 99.35. If the momentum continues strong and we see a solid break past 99.35 then 97.44 could be reached and a possible extension to 96.99.
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