Market Brief – Monday 26th August 2013

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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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

AUSTRALASIA

ASX – 5149

After a poor start the ASX rallied to closed 24 points above the all important 5125 level.

If we are in the process of a new uptrend, we would like to see the ASX hold above 5102 and continue early in the week with long up bars reaching 5249. If this level is reached and if it is broken with solid momentum then we could see 5447.

If an attempt at a down move is to made, then we would like to see a solid break past 5073 which could lead to 4983. If we see 4983 broken with solid downward momentum then the level between 4903-4862 could act as support.

EUROPE

FTSE – 6504

The FTSE again moved lower last week and reached a low of 6348 and then bounced back up closing 150 points higher. Our proprietary model FICM is indicating that last week’s downward move is now is in a potential slowdown process.

If the slowdown process does not occur and the down move continues, then a solid break past our short term level of 6494 could see 6395 reached. If 6395 is broken with long solid down bars then the area of interest is 332-6306. This would be the lower area of the standard deviation channel and one of FICM’s potential levels of support.

If Friday’s move was the reversal bar for a new upmove, then we would like to see a short term level of 6531 broken early (which would also be a break above the standard deviation channel), followed by a solid break past 6599 with strong long up bars. If the momentum is strong then we could see 6699 and ultimately 6740 reached.

DAX – 8424

The DAX continued its sideways range and closed above an important level of interest, 6345. There is a strong signal that there is a large move in the wind, and with the German elections on 22nd of Sept and the next Fed meeting on 17-18 Sept, these might be the triggers needed. We will be watching the DAX closely over the next few weeks.

If the DAX is to move higher then we would like to see 8480 (which is the end of the range) broken before a new move higher towards 8559 is achieved. This level will be revised once met.

If the DAX is to move lower then we would like to see 8345 broken early in the week, and if it does with solid downward momentum then our lower targets are the same as last week 8106 and 8006.

US

S&P – 1663

The S&P made another strong move down early in the week, but as with previous times, the move was overextended which was followed by a solid move back up to close 15 points higher than 1648 which is an important level of interest.

If the S&P is to take another move down then we would like to see a solid move past 1648 broken with the same strong momentum we saw the previous week. If this takes place then 1633 and 1623  will be our next lower targets.

If we are to see an up move from here then we would like to see a solid break up past 1665 and 1671 early in the week followed by a strong move towards 1693. If we see 1693 broken with solid upward moves then 1710 will be our upper target.

NASDAQ – 3121

The NASDAQ is now becoming resilient to the moves made by the S&P, and even though it made a move down it was not as aggressive as the one made by the S&P. The NASDAQ then followed the S&P on the way up.

Last week we stated; “If the NASDAQ has any chance at continuing an upmove then we would like to see a strong move with long up bars breaking 3088 – 3107”. It did, and we are now 14 points above 3107. If the up move is to continue then 3101 needs to hold as strong support followed by a move past 3148. If the move up haS strong momentum then we could see 3170 reached and even an ambitious level of 3194.

If the downward process takes full effect, then a break back below 3090 could see 3032 reached and if the momentum is strong then 2983 would be our first lower target.

FOREX

AUD.USD – 9021

The AUD fell away early in the week but then regained upward momentum towards the end of the week. However, it did not have enough strength and has fallen short of an important level of 9083.

Last week we saw a break and close below 9083. If the longer term downtrend is to continue then we would like to see downward momentum break below 8996 before reaching 8780, which as mentioned previously, will become an important level to watch.

If we see a new uptrend start then the level that needs to be broken is 9256 with strong long up bars followed by a strong move past the area between 9370 – 9395. But before this occurs we would like to see a break and close above 9083. Upper targets will be revisited once new uptrend is confirmed.

EUR.USD – 13378

The EUR made an early attempt at a break above 13432 but was not able to hold the level and fell back down and closed 50+ points lower.

If the move up is to continue then we would like to see 13329 hold as strong support followed by a break past 13432 early in the week. If we see 13432 broken with upward momentum then 13508 could be reached. If this level is broken with solid upward momentum then an ambitious target of 13710 could be reached.

If the downside move is to start then we would like to see a break below 13309 followed by a solid break with long down bars past the 13285-13271 area for potential change in direction. If this is broken then 13233 will need to hold otherwise 13177 could be reached.

GBP.USD – 15565

The GBP made another early move last week and for a while looked like it did not want to stop. But once it cleared 15700 it found it hard to hold those levels and made a strong move back down to close below 15597 which is a strong level of interest.

If the down move continues then we would like to see 15410 – 15383 broken, which is also the completion of the range. If these levels are broken with strong downward momentum then 15282 could be the next target. If 15282 does not become support then we will look for 15185 to perform that duty.

If another attempt is made at an upward move then a solid break needs to occur past 15597 followed by another solid break with long up bars past 15722 before 15788 is reached. If we see strong momentum then the ambitious target of 15838 could be achieved.

USD.JPY – 98.67

The JPY gave way to the USD again and has closed above an important level of 98.62.

For a new upward rally to take place for the USDJPY pair we would like to see the 98.33 – 64 area to hold as solid support before a move towards 99.34 – 56 is made. Once this area is broken then 100.52 could be reached. If this is also broken with solid long up bars then an ambitious target of 102.51 could be reached.

For this down move to restart we would like to see 98.13 broken followed by a solid break past 97.56 which could then lead towards 96.14 and possibly 95.08.

COMMODITIES

GOLD – 1397

Last week GOLD reached our previous upper target of 1391 and closed 6 points above this level, but just below the long term downward Standard Deviation Channel.

If GOLD is to finalise the range and reach 1436 then we would like 1391 to hold as strong support before a move is made past 1414 which is the Fib 38.2 level. Once the range is met we will revisit.

If the upper Standard Deviation Channel line proves difficult to break then we could see a move back down towards 1350 – 1336. If this area is broken with long solid down bars and 1280 does not provide any support then we could be in for another dramatic fall.

US LIGHT CRUDE OIL – 106.31

Last week OIL attempted a move down but was halted near 103.50 and then reversed and bounced back up by about 300 points to close again above the Standard Deviation Channel.

For the up move to continue we would like to see OIL hold above 105.82 before we see a 109.73.

A solid break past 109.73 which could see a short term target of 114.06 reached, and if the momentum is strong then 119.11.

If we see a down move then first we need to see a break past 105.48 followed by a strong break past the standard deviation channel could see 102.27, and if 102.27 is broken the 100.92 could be the next level.

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