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Market Brief – Monday 15th February 2016

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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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INDICES

AUSTRALASIA

ASX – 4839 ( -80 or -1.63% )

The ASX again broke through the August 2015 lows last week and is undoubtedly testing the resolve of long-term bulls.

VOLATILITY ALERT: RBA Minutes on Tuesday, Employment numbers on Thursday.

For a continued moved higher we would now like to see a strong break and close above 4844 on our way to 4873. Should this occur we would likely see a move into 4890, and further breaks higher could lead to 4938 before a pause. If momentum is strong we could see a move back up into 4997, and should we continue to rally we could see a strong move to 5090.

If we fail to break above 4873, we are likely to retest 4782. A break below may result in a move back down to 4747 followed by 4712. Should we see a strong break and close below 4712 we could see a fast and sharp move down to 4618.

 

EUROPE

DAX – 8989 ( -269 or -2.91% )

Last week, we alerted members in our LIVE CHAT ROOM that some of our models were pointing to a potential bottom in the DAX. Have we seen this already?

VOLATILITY ALERT: Draghi speaking on Monday.

For a move to the upside we would like to see 8890 hold as support followed by a strong break and close above 9092. Additional breaks higher would likely result in a move to 9135; and if momentum is strong we could see a move into 9291, 9322 and 9386 before a pause. Should a complete V-reversal scenario ensues we may see a move all the way back up to 9620.

On the downside we are watching for a break and close below 8890. A strong break and close below this level could send the DAX back down to 8681 and 8625 before a pause. If momentum is strong, a break and close below 8625 could see a sharp move down to 8401 and if there is no stopping the DAX to the downside, we could see a very fast move into 8286.

 

US

SP500 – 1863 ( -17 or -0.9% )

A volatile week for the S&P saw it finish slightly down following a rally on Friday.

NOTE: Monday is a public holiday in the US- President’s Day.

For a sustained move higher we would first like to see a strong break and close above 1875, followed by another strong break above 1902. Should this occur we will look for a move back up into 1915, and if momentum remains strong we may see 1958 before a pause.

Should the S&P fail to break above 1875 we may see the S&P move back down to retest 1853. A break below this level may again result in moves into 1834 and 1821-1817. Continued breaks below 18 would again see us retest 1809, and if momentum remains strong we could see 1772 and 1745.

 

FOREX

AUD/USD – 0.7105 ( +40 or +0.57% )

The AUD was for the most part sideways last week and so our comments remain unchanged.

VOLATILITY ALERT: RBA Minutes on Tuesday, Employment numbers on Thursday.

For a move higher we would first like to see the AUD hold 0.7014, followed by a strong break back above 0.7113. A break above could see us test 0.7197, and if the move to the upside remains strong we will look for 0.7229 – 0.7236 before a pause.

If the AUD breaks back below 0.7014, we may likely see a move back down into 0.6997. A strong break below 0.6997 could see us move back down into 0.6958 and 0.6934. Should the move to the downside remain very strong we will look for a retest of 0.6830. A break below this could see the AUD in a fast move down to 0.6778.

 

EUR/USD – 1.1255 ( +98 or +0.88% )

Last week we saw the EURO reach one of our resistance levels but was not able to strongly break through, before closing for the week very close to our 1.1248 level! You can see this in more detail in our MEMBER PORTAL.

VOLATILITY ALERT: Draghi speaking on Monday.

For a sustained move higher we would now like to see a strong break above 1.1347. A break and close above this level could result in a fast move to 1.1453, and a break above this level could see 1.1492 before a pause.

On the downside, a break below 1.1248 may result in a move back down into 1.1163 and 1.1117. A strong break and close below this level may see the EURO trade down to 1.1033 – 1.1026, and if momentum remains strong to the downside we could head back down to 1.0977.

 

GBP/USD – 1.4504 ( +5 or +0.03% )

Sideways and chop. Cable closed pretty much where it opened for the week. As such our comments remain unchanged.

VOLATILITY ALERT: CPI on Tuesday, Employment numbers on Wednesday

For a move to the upside we would like to see 1.4469 hold as support, followed by a break of 1.4635. A break of 1.4635 could see a move higher into 1.4790, and should momentum remain strong to the upside we may see the GBP rally to 1.4877 – 1.4896 before a pause.

On the downside a strong break and close below 1.4469 could see a move back down to 1.4382. A break below this level would see a move into 1.4223 and 1.4194 before a pause. Should we see continued strength to the downside we could see a very sharp move into 1.4039.

 

USD/JPY – 113.21 ( -361 or -3.09% )

What a week it was for the USD/JPY. These markets have spoken and it appears they do not approve of the BoJ’s latest “Yentervention”.

VOLATILITY ALERT: GDP, Manufacturing and Trade Balance numbers this week.

For a move to be sustained on the upside we would like to see a strong close above 113.88, followed by another strong break and close above 114.08. A strong break and close of 114.08 may result in a move into 114.57, and if upside momentum persists we may see quick moves into 115.53 and 116.08.

If the USD/JPY cannot close above 113.88, we could see continued weakness with a move back down into 111.73. A break below this level may then result in a retest of 111.09. Should we see a strong break below 111.09 we could see a fast and sharp move all the way down to 109.94

 

COMMODITIES

GOLD – 1237 ( +64 or +5.46% )

The GOLD bugs are officially back in town. A blowoff move on Thursday saw GOLD break all kinds of levels and rocket to the upside. We have now seen GOLD rally into an important level and will again be watching this market closely in the MEMBER PORTAL.

For a continued move to the upside we would first like to see 1222 hold, followed by a strong break and close above 1247. A break above 1247 may result in a retest of 1258, and if momentum remains very strong we could see a final push into 1276 before a pause.

For a sustained move to the downside we would like to see GOLD break and close below 1222. A strong break below this level could result in a move back down to 1206; and should we see a complete fade of last week’s move we may see GOLD trade back down to 1187 and 1181.

 

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