16.07.18 - WMB_w

Market Brief – Monday 18th July 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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 5426 ( +138 or +2.61% )

As we mentioned last week, the ASX was setting up for a big rally as we saw the market push higher 4 out 5 days, taking a breather on Friday.

VOLATILITY ALERT: NAB Quarterly Business Confidence on Thursday.

For a continued move to the upside we would like to see this market break up and hold above 5437. Should this occur, we will look for a move back up to 5504. A strong break and close above this level could see the market trade to 5535 before a pause, however if momentum remains very strong we could see the ASX rally to 5589 by the end of the week.

If we fail to break above 5437, we will look for a move back down to 5373. A break below this could result in a move back into 5294 and 5248-5238, whilst further breaks to the downside could see the ASX head to 5161. Should we see a complete reversal to the downside, we will watch for a move back down to 5090.

 


EUROPE

DAX – 10050 ( +425 or +4.42% )

We said the DAX would eventually wake up and potentially rally, and it did so last week managing to close above 10,000. Will this move continue to the upside for a FULL FADE towards pre-Brexit levels..?

We will be discussing this market in the LIVE CHAT ROOM this week.

VOLATILITY ALERT: ZEW Economic Sentiment on Tuesday, Interest Rate Announcement and ECB Press Conference on Thursday, German Flash PMI on Friday.

For a continued move to the upside we would like to see this market hold above 10013. If we can hold above this level we will likely see a retest of 10158. Should we break 10158, we will be watching for a big push higher into 10337 and 10382.

On the downside, a strong break and close below 10013 could see a move back down to 9822. A break and close below this level could likely result in a retest of 9620, and should we break below this level we will then look for a move down into 9514. If the moves to downside remain very strong, we could see a very sharp move into 9447.

 

 

US

SP500 – 2152 ( +26 or +1.22% )

A historic week for the S&P: New all-time highs! We came within 2 points of our key 2176 level before reversing lower. Anyone who tuned into our LiveTV session last Friday saw how we broke down this market and why we were expecting higher prices.

We will be discussing this market in more depth again in the MEMBER PORTAL.

VOLATILITY ALERT: Building Permits on Tuesday, Philly Fed Manufacturing Index on Thursday.

For a move higher we must now see the S&P break above 2176. Should this occur we will look for a move into 2194. A strong break and close above 2194 is likely to see the S&P set its sights for 2200. If we can hold above 2200 this week, we will ultimately then look for a move to 2234.

If we cannot break above 2176, we will watch for this market to hold 2150. A break below 2150 may see this market retest the previous all-time highs at 2137. This will be a key area to watch closely. A strong break through 2137 could result in a move back down to 2126, and should we break 2126 we cannot rule out a move back down into 2112 by the end of the week.

 

 

FOREX

AUD/USD – 0.7578 ( +12 or +0.16% )

The AUD only just managed to grind higher after a large reversal on Friday. Having closed only 12 points higher last week our levels remain unchanged.

VOLATILITY ALERT: Monetary Policy Minutes on Tuesday, NAB Quarterly Business Confidence on Thursday.

For a move higher we would like to see the AUD hold above 0.7561, followed by a break and close above 0.7617. A strong break and close above this level could then see a quick move to 0.7662 before a pause; and if momentum remains strong we will look for strong move into 0.7729.

If we cannot hold above 0.7561, we will look for a move back down to 0.7447. A strong break below this level may result in a move back down into 0.7364 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7282.

 

EUR/USD – 1.1024 ( -26 or -0.24% )

Like the AUD the EURO managed to grind its way higher all week, and then  a large down day on Friday reversed all weekly gains. This week we have the all important ECB Interest Rate Announcement and Press-Conference so it will be a BIG week for the EURO.

NOTE: The failed coup attempt in Turkey beginning in Friday appears to have spooked markets a little as they sold off heavily into the close.

We will be discussing this market in more detail this week in the LIVE CHAT ROOM, and covering the ECB Interest Rate announcement LIVE in LIVE TV.

VOLATILITY ALERT: ZEW Economic Sentiment on Tuesday, Interest Rate Announcement and ECB Press Conference on Thursday, Flash PMI numbers on Friday.

For a sustained move higher we would like to see the EURO break and hold above 1.1033, followed by a strong break above 1.1064. If this market can break and close above this level we will look for moves into 1.1117 and 1.1163. Breaks of these levels may see a retest of 1.1201. A break above 1.1201 may result in a retest of 1.1248, and if momentum remains strong we could see fast moves into 1.1347 before the end of the week.

If the EURO cannot break back above 1.1033, we will watch for a move back down to 1.0977. A strong break and close below this level may see the EURO move back down to 1.0902 – 1.0897, and if momentum remains very strong we could see a sharp move down to 1.0814.

 

GBP/USD – 1.3182 ( +246 or +1.9% )

Markets had priced in a 77% chance of a rate cut last week and they were WRONG. We’re we surprised? Not at all. We covered the BoE Interest Rate announcement live and said WATCH OUT if they don’t cut rates.

VOLATILITY ALERT: Annual CPI on Tuesday, Unemployment numbers on Wednesday, Retail Sales on Thursday, Manufacturing PMI on Friday.

For a move to the upside we would like to see this market break and close above 1.3227. A break above this level could see the market retest to 1.3426. Should we see a strong break through this level we will look for a quick move to retest 1.3495, and if momentum remains very strong a push to 1.3644 cannot be ruled out.

If we cannot break above 1.3227, we will look for a move back down to 1.3035.  A strong break below this level could see a quick leg down into 1.2928. Should we break this level we will watch for a sharp move down to 1.2869; and if momentum is very strong a retest of the low at 1.2798 cannot be ruled out.

 

USD/JPY – 104.84 ( +432 or +4.3% )

The $/JPY was one of the best performing markets last week and the reversal we have eluded to is now very well underway. We rallied right into our big 106.30 level, calling the high for the week down to 1 point!

NOTE: Monday is a bank holiday in Japan.

For a continued move to the upside we would like to see this market break above 104.97, followed by a quick retest of 106.30. A strong break and close above this level could see the USD/JPY rally to 107.75 quickly, and then 108.31 before a pause. Should we see continued upside, we will look for a move into 109.21

If however the USD/JPY cannot break hold above 104.97, we will look for a move back down to 103.99. A strong break below this level could see the USD/JPY trade quickly down to 103.21, and should we continue to trade lower a sharp move to 102.29 is possible. If momentum on the downside remains we may see 101.12 before the end of the week.

 

 

COMMODITIES

GOLD – 1337 ( -29 or -2.12% )

Gold took a breather last week as we saw a ‘risk-on’ environment return.

For a continued move higher we would like to see GOLD hold above 1333 and more importantly 1322. If we can hold these levels we will look for a move back up to 1355. A break above 1355 could see GOLD retest the important 1375 level before another pause. This is a key area and should we see a strong close above 1375, we will look for a move to 1400.

If Gold cannot hold above 1322, we will look for a move back down to 1303. A strong break and close below this level may result in a retest of 1294, and further breaks to the downside could see Gold trade retest the important 1276 level. If downside momentum continues to persist, a strong break through 1276 could see a 1257 by the end of the week.

 

 

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