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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 Long.
AUSTRALASIAN SESSION
ASX – 4982
The ASX is in a sideways market as discussed last week. It could be due to the confusion of the European markets going down, while the US Market are going up.
If the ASX breaks down with a solid bar then we would look for 4902 as a short term target, and 4719 in the near future. If the ASX finds support at current levels then there may be a small up move in the short term to 5126.
EUROPEAN SESSION
FTSE – 6402
The FTSE is moving sideways at the moment, and again, for the down move to take real effect we are looking for 6307 to break, and then looking to reach 6079 before heading down to 5922 where it should find support.
The previous down move reached a slowdown process which occurred near the 6307 support level. We will be watching this closely as it may become support, and our previous target of 6578-81 could be reached.
DAX – 7786
We are currently in a slowdown process of the down move, but feel that it may have another 100 points or so before it takes a breather. The Dax is definitely trying to take the lead early but the SNP does not want to follow.
We are watching to see how long the Dax or the SNP can hold out before “follow the leader” occurs.
For short terms levels we are looking at 7681 and 7586.
CAC – 3718
The CAC is now about halfway through its down move process and looks to be heading towards 3572 which is still a good distance away, and as discussed last week, we would like to see 3678 reached before our lower target is met.
3792 still remains a resistance level.
US SESSION
SNP – 1561
We have now started the extension of the up move which is a little concerning, as US treasuries have also made a move above 14400 and stayed there (they are near 14500). This shows that we are in for a decent move down in either the equity markets or the money markets. The big question is which one will make the move first?
In this scenario we are looking for some sort of volume based move in line with a price level break. Also, as we are approaching the seasonal “sell in May and go away” period, suggested caution should be taken.
The levels that we will be looking at are 1555 and 1535 for a possible leg down on the equity markets. We will also be watching some of the European markets as they are breaking key levels on the downside at the moment as mentioned earlier.
In line with this, if the SNP reaches our original proposed target on the upside of 1582 then another revision will be made.
NASDAQ – 2793
Now that that the recent Cyprus news is becoming old, 2783 is becoming quite a stubborn level for the NASDAQ, and we are still in a sideways move which shows plenty of indecision by the market.
If a long bar breaks up past 2828 occurs, then we could see 2875 tested a lot sooner than originally thought.
However, we are still cautious regarding a break below 2783 which could see 2741 and then 2695.
FX MARKETS
AUD.USD – 10443
Once again the AUD is full of surprises and a decent break above 10353 has created a stepping ground for a decent run at 10554. The current move down could find itself supported by the previous resistance level of 10353, and then bounce up towards 10554.
We do stress caution as the 10445 level is still potentially a strong resistance point, and if we do see it head towards the 10600 levels then this level needs to be broken well for confirmation, as well as needing to be done early in the move.
A strong break below 10353 could see our downside target of 10182 come about.
EUR.USD – 12987
The EUR is continuing its down move after its attempt at our previous level of 13083 with a high of 13048. It came down and it took out 12963 in one solid down bar and is now in the process of another down move. It is now also halfway through its process and could see a possible support level of 12702 with some resistance at 12926 if any up move plays out.
GBP.USD – 15228
The up move has stalled momentarily as these levels are proving to be more resistant than first thought. Even though it is now hovering around our previous resistance level of 15185 and looks like its becoming support, there is a potential resistance area between 15324 – 15352 so short term plays might be on the cards.
As mentioned last week, if the levels mentioned prove to be solid resistance points then heavy down moves could follow as a result.
USD.JPY – 9302
Money markets going up, Equity markets going up, is this possible Yen strength?
The USD.JPY slowdown process is well on the way and a slow down towards 9241 is taking effect. Now all the JPY needs is for the equity markets to go down to take full effect, so that traders take money from the equity markets and put it into safe haven options like the JPY.
COMMODITIES
GOLD – 1603
GOLD has found it difficult to break free on the upside and this could be the effect of potential optimism coming back into the equity markets, or stronger levels of resistance at previous levels.
Last week FICM indicated a potential resistance level at 1612 as the up move was reaching a slowdown process. This has played out and now we are in the down move, but it has not yet taken the form of a solid break. If the down move is to continue then a confirmed break below 1579 needs to happen, otherwise we could see a sideways move.
US LIGHT CRUDE OIL – 9683
LIGHT CRUDE has reached our target of 9742 with a high of 9766.
Technically we are still in the upward move but could see a small sideways play. But if the move takes another leg up then we could potentially see an ambitious level 9945 reached.
On the other side, if it decides to take a small breather and head back towards 9347 then it should find some potential mild support at 9377 before reaching 9347.
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