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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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ASX – 5746 ( -83 or -1.42% )
Last weeks stronger than expected unemployment numbers were not enough for the ASX to rally higher after a big sell-off on Wednesday. We have now come into important support going into this week.
VOLATILITY ALERT: Quarterly Construction Work on Wednesday.
For a continued move higher we would like to see the ASX hold above 5746, followed by a strong break and close above 5777. A break of this level could A strong break and close of 5777 may result in a retest of 5823, and if momentum is very strong this week we will could see a strong rally into 5875.
If the ASX cannot hold above 5746, we will look for moves down to 5705 and 5690. A strong break and close below this level could see the ASX test 5606 and if momentum is strong we could easily see further losses down to 5589 this week.
DAX – 12639 ( -143 or -1.12% )
Last week we saw the DAX broke back down through our key level of 12714 after previously holding this level for over a week. This is now the key level going into this week.
NOTE: Thursday is a public holiday in Germany (Ascension Day).
VOLATILITY ALERT: Eurogroup meetings on Monday, German Flash PMI and IFO Business Climate on Tuesday, Draghi speaks on Wednesday.
For a continued move to the upside we must see the DAX close and hold above 12714. Should this occur we could see a strong move 13110, and if momentum is very strong to the upside we cannot rule out a move to 13205.
If the DAX fails to hold above 12714, we will look for a move back down to 12536. A strong break below this level is likely to see a push further down into 12384. If momentum to the downside remains very strong and selling pressure increases we cannot rule moves to 12198 and 12044.
SP500 – 2382 ( -9 or -0.38% )
Like the DAX the S&P held our 286 level early in the week until Wednesday’s ‘Trump’ sell-off, which caused a sell off in global equities. We will be discussing this market in more detail in the LIVE CHAT ROOM this week.
VOLATILITY ALERT: New Home Sales on Tuesday, Existing Home Sales on Wednesday, Core Durable Goods and quarterly Prelim GDP on Friday.
For a move higher we would like to see the S&P close strongly above our key level at 2386, followed by a retest of 2394. Should this occur we will look for a retest of 2400, and if this level is broken we will look for a move to 2418.
If we cannot close above 2386, we will look for a move back down to 2370 and 2360. Below this we have a very key level at 2334.
AUD/USD – 0.7456 ( +70 or +0.95% )
Last week we mentioned the Aussie Dollar has put in a short-term low and we appear to be close to a short-term high soon. This week we expect markets to be sentiment driven and will be covering this in the MEMBER PORTAL.
VOLATILITY ALERT: Quarterly Construction Work on Wednesday.
For a move higher we would like to see the AUD hold above 0.7447, followed by a break and close above 0.7489. A strong break and close above this level could see a quick move to 0.7561 before a pause; and if momentum remains strong we will look for a move into 0.7617.
If we cannot hold above 0.7447, we will look for a move back down to 0.7364. A strong break below this level may result in a move back down into 0.7282 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7229.
EUR/USD – 1.1207 ( +276 or +2.52% )
The EURO continues to strengthen on the back of a weaker US dollar. Thursday saw seller’s step into this market only to be completely overrun by the bulls on Friday; as they closed the market at a very key level. We will discuss this in more detail in the MEMBER PORTAL.
NOTE: Thursday is a public holiday in France and Germany (Ascension Day).
VOLATILITY ALERT: Eurogroup Meetings on Monday, Euro-area Flash PMI on Tuesday, Draghi speaks on Wednesday.
For a sustained move higher we would now like to see the EURO hold above 1.1201. Should this occur we will then look for a move to 1.1248 before a pause. However a strong break above this level could see a quick move into 1.1347. Should momentum remain strong to the upside, we cannot rule out a move into 1.1380 this week.
If the EURO cannot hold above 1.1201, we will watch for a move back down to 1.1117. A break below this level could see this market trade quickly down 1.1083 cannot be ruled out; and if momentum remains very strong we could see a sharp move down to 1.1033 and 1.0977.
GBP/USD – 1.3035 ( +150 or +1.16% )
Like the EURO, Cable also continues to rally on a weaker US dollar but also in the leadup to election next month. We are again at a key level here and will be discussing this market in more detail in the LIVE CHAT ROOM.
VOLATILITY ALERT: Inflation Report Hearings on Tuesday, quarterly Prelim Business Investment on Thursday.
For a move to the upside we would like to see this market break above 1.3035. If the GBP can hold this level we will look for this market to head to 1.3227. Should we see a strong break through this level we could see the GBP/USD test 1.3426 very quickly.
If we cannot break above 1.3035, we will look for a move back down to 1.2928. A strong break below this level could see a quick leg down into 1.2720. Should we break this level, a sharp move down to 1.2510 cannot be ruled out.
USD/JPY – 111.27 ( -207 or -1.83% )
All year the YEN has traded back and forth through 111 and last week we saw this level broken again; only to be recaptured (for the time being). Do we go higher or lower from here…?
For a move to the upside we will look for this market to hold above our key level at 111.09, followed by a strong break and close above 111.73. Should this occur we will look for a move back up to 112.22 before a pause. If momentum remains strong to the upside, we may see a very strong move to 113.87 – 114.08 before the week’s end.
If we cannot hold above 111.09, the YEN may see further downside into 110.10. A strong break and close below this level could spell trouble for the YEN, with a very fast move down to 109.94, and further downside could see this market sell-off back down to 109.21.
GOLD – 1255 ( +27 or +2.2% )
GOLD continues to buck the trend amid some short-term political uncertainty, whilst also benefiting from a weaker US dollar.
For a continued move higher we would like to see this market hold above 1247, followed by a strong break through 1257. Should this occur we will look for a continued rally into the key 1276 – 1278 area, and if momentum is strong to the upside we could see a move to 1294.
If Gold cannot hold above 1247, we will look for a move lower into 1222. A strong break below this level could then see a retest of our key levels at 1216 and 1206 level by week’s end.
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