Market Brief – Monday 20th October 2014

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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 5316  ( + 188 or + 3.67% )

The ASX rebounded off of the previous weeks lows and erased all of the loses too.

For the up move to continue we would like to see an early solid long up bar break and close past the area between 5345 – 70. Once this occurs we could see 5392 reached and if the upward momentum is strong then we could see the ASX find some resistance near 5448 – 63.

For the down move to restart we would like to see a strong move past the area between 5285 – 70. This could then lead the Index towards 5220 followed by a strong push reaching 5176 – 45.

EUROPE

FTSE – 6304 ( + 3 or + 0.05% )

The FTSE had a wild ride last week reaching a low of 6070 before rebounding 250 + points to close 3 points higher from last weeks close. Therefore our comments remain the same.

For the move higher to restart we would like to see an early break past both 6357 and 6394 before an attempt to break through 6459 is made. This will need to occur with a solid long up bar, if so then the FTSE could find resistance near 6523 – 50.

If the downside move takes another leg down we could see early breaks past 6264 moving down towards 6182. If this level is also broken then 6002 could be seen. A strong break below this level could see heavy downside moves.

DAX – 8817 ( + 77  or + 0.88% )

Even though the DAX closed higher last week, it wasn’t pretty during the week as the DAX was in FREE FALL reaching a low of 8350 before rebounding 500 points to reach a high of 8856. This is why we like the DAX.

For the up move to continue this week we would like to see 8764 hold as a level of support before an early burst towards 8961 is made. We see this to be the next significant level that needs to be broken before a move higher can continue. Once this occurs then we could see it move back past 9000 reaching 9084 and possibly 9120. If the momentum is strong then 9164 – 9202 is not out of reach for this DAX.

For the DAX to restart it’s move lower we would like to see an early reversal past 8764 early in the week followed a continuous move past 8641, once this level is broken then 8522 could provide some support. But if this is also broken with a long down bar then 8429 and 8335 could be reached. If the momentum down is strong then 8106 might not be too far away.

US

S&P – 1888 (  – 12  or  – 0.63% )

OK, for now we have seen a “shaking out and then rally” The BIG BOYS were asking for Volatility and now we have it. Get ready boys and girls, this could get ugly.

By this we mean that models will start breaking due to the unpredictable nature of the moves as the market tries to find its feet.

For the up move to restart we would like to see an early break back 1898 followed by a strong break past 1908 before an attempt is made at 1927. If this level is broken with a long solid up bar then we could see the S&P reach 1943.

For the down move to restart we would like to see a clean break and close past 1869 leading the Index towards 1854. Another break past 1854 could start a FREE FALL reaching and testing 1818 again and possibly pushing through reaching 1794. This is probably when Panic Selling will start. If this occurs we will discuss in our LIVE CHAT ROOM.

FOREX

AUD.USD – 8749  ( + 62  or + 0.71% )

The AUD had another wild ride last week which included a 185 point day, this is 2.6 x its daily ranges. Even though the AUD closed 60 points higher we have 2 keys levels that need to be broken before new direction is established, therefore our comments remain the same.

For the up move to restart we would like to see a solid long bar break and close back above 8774 (key level) followed by a strong move past 8823 which could potentially reach 8971.

The AUD has now broken down and the next key level is 8660 (key level – lows from Jan 2014). If this level is broken early this week we could see 8563 and 8461 very quickly. Once these levels are broken 8378 could be seen.

EUR.USD – 12759 ( + 131 or + 1.04% )

Once again the EUR started moving higher last week but after a 262 point day on Wednesday we saw it fall back down to close between the levels of 12748 – 64 which is one of our FICm levels as mentioned last week.

For an upmove to restart we would like to see an early break and close past 12764 which will then need to become a strong level of support before we see 12823. If the upward momentum remains strong then a possible extension towards 12967 – 81 is possible.

For the down move to continue we would like to see 12764 become a solid level of resistance followed by a move lower reaching 12694. Once broken we could see 12652 and 12608 reached. if the downward momentum is strong then 12491 could be seen.

GBP.USD – 16090 ( + 15 or + 0.09% )

After an early fall by the GBP we saw a strong 3 day rebound to close slightly higher. Therefore our comments from last week remain the same.

For the GBP to move higher we would like to see a solid start to the week breaking past 16102 and 16148. This could then lead the pair to reach 16246 and possibly 16307.

Another leg lower could be seen if an early break past 15988 occurs. This could then lead it to reach 15844 and 15723 respectively. If the down move is strong then we would like to see a long bar break past 15723 before reaching 15681 and possibly extending towards 15522.

USD.JPY – 10689 ( – 75 or – 0.70% )

“This pair is now following the equity markets.”

For the USD to move higher we would like to see a strong early break past the area between 10723 – 63. Once this occurs 10836 will play an important role in deciding the next move.

If the down move restarts we would like to see an early break and close back past 10683. If this level is broken then we could see 10579 and possibly 10525 again.

COMMODITIES

GOLD – 1238 ( + 15 or + 1.23% )

As Volatility in the markets spikes we see GOLD itching to break on the upside. As mentioned last week “This could get Interesting”

For the upward move to continue we would like to see an early break and close past 1241 again reaching 1252. Once this level is breached we could see 1263 and 1274 respectively

If 1241 proves hard to break then for the down move to restart we would like to see 1226 broken followed by a strong push past both 1216 and 1208 before testing 1180 again.

US LIGHT CRUDE OIL – 8207 ( – 349  or – 4.08% )

OIL found itself below $80 before strong buying brought it back above. We have mentioned this before “Be careful in chasing explosive moves”

For the upmove to restart on OIL we would like to see 8395 hold as a strong level of support before another break higher past 8551 occurs. This will then need to be done with a long solid up bar reaching 8750 and possibly reaching 8884.

Now that OIl has broken 8395, we would like to see a break and close below 8000 which will be the important psychological (round number) level on the downside. A strong break below it will be discussed in our LIVE CHAT ROOM.

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