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Market Brief – Monday 29th Feb 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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 4887 ( -70 or -1.41% )

Last week the ASX closed in a very indecisive manner having printed 3 inside days in a row. This week we have a lot of data being released so BE PREPARED. We will be monitoring these events closely in our LIVE CHAT ROOM.

VOLATILITY ALERT: RBA Cash rate on Tuesday, quarterly GDP on Wednesday, Trade Balance on Thursday, Retail Sales on Friday.

For a continued move higher we would now like to see 4890 hold with a move back up into 4921. A break above this level may result in a retest of the important 4997 level. Should we see a strong close and break above 4997 we will look for a move into 5021, and if momentum remains strong we will look for moves into 5090 and 5161.

If we fail to break above 4921, we will watch for moves back down to 4859 and 4844 before a pause. Should momentum remain strong to the downside, we may see moves back down into 4782 and 4766. Subsequent breaks below these levels could result in sharp moves back down to 4712 and 4618. 

 

EUROPE

DAX – 9470 ( +95 or +1.01% )

The DAX ended the week almost where it started, and this sideways move is gearing up for a directional breakout so once again BE PREPARED.

VOLATILITY ALERT: German Retail Sales and CPI on Monday.

For a continued move to the upside we would like to see 9386 hold as support followed by a close above 9560. A close above this level could see a move into 9620, if momentum remains strong a break and close above 9620 may result in a move back up to 9822.

On the downside we are watching for a break below 9322, which may then result in a retest of 9254. A break and close below 9254 could see a move down to 9135 followed by 9092. If momentum remains strong we could see a quick move down to 9016, and should the selling really gain strength we will be watching for sharp moves down to 8890 and 8681.

 

US

SP500 – 1944 ( +27 or +1.41% )

The S&P appears to the be the best house in a struggling equities complex. Last week we said the S&P has put in a significant double bottom. The question this week is: Will this rally continue, or are we seeing signs of a short-term top? This will be discussed in more detail in our MEMBER PORTAL this week.

VOLATILITY ALERT: Manufacturing PMI on Wednesday, NFP on Friday.

For a move higher we would like to see 1934 hold as support followed by a break higher to retest 1968. A strong break and close above 1968 could see a fast move into 1990 before a pause. Should momentum remain strong we will look for a move into 2002.

For a move to the downside we will look for a strong break and close below 1934, which may result in a retest of 1915. A strong break and close below 1915 may see 1902 and if we continue to break lower we will look for a move back down to 1875 and 1865. If momentum is very strong to the downside we could see a move back down to 1834.

 

FOREX

AUD/USD – 0.7126 ( -22 or -0.31% )

A largely sideways week means our levels remain unchanged. However like the ASX, we are preparing for a big week of data and could see some heightened volatility on the AUD this week. We will be announcing potential outcomes of this data in our LIVE CHAT ROOM.

VOLATILITY ALERT: RBA Cash rate on Tuesday, quarterly GDP on Wednesday, Trade Balance on Thursday, Retail Sales and NFP on Friday.

For a move higher we would now see the AUD hold 0.7113, followed by a break and close above 0.7197. A break above this level may result in a move to 0.7229 – 0.7236 before a pause. Should we see a strong break and close above this area, the AUD could really rocket and we will then be watching for moves into 0.7305 and 0.7365.

If the AUD cannot hold 0.7113, we will be watching for a move back down to 0.7068. A break and close below below this could see quick moves into 0.7014 and 0.6997, and subsequent breaks below 0.6697 could see a quick moves down 0.6958, 0.6934 and finally 0.6917 before a pause. Should momentum remain strong to the downside, we will be watching for sharp moves down to 0.6830 and 0.6778.

 

EUR/USD – 1.0929 ( -200 or -1.8% )

The EURO continues to slide and we’ve now all but faded the strong move at the beginning of the month.

VOLATILITY ALERT: NFP on Friday.

For a sustained move higher we would like to see a close above 1.0977 followed by breaks above 1.1033 and 1.1064. Should this occur we could see moves back up into 1.1163 and 1.1201 before a pause. If momentum to the upside remains strong we will look for further moves higher into 1.1248; and if there is no stopping the upside we could see strong moves into 1.1347 and 1.1385.

If we fail to break above 1.1033, we will watch for move down to 1.0897. A break below this level may result in a retest of 1.0814 before a pause. If there is continued downside pressure we will then look for a move down into 1.0743 – 1.0734.

 

GBP/USD – 1.3870 ( -532 or -3.69% )

More news of Brexit saw the GBP gap down on Monday followed by a 500+ point drop into last week’s close. With continued uncertainty caution is again advised this week.

VOLATILITY ALERT: PMI numbers on Tuesday – Thursday, NFP on Friday.

For a move to the upside we would like to see a strong break and close above 1.4039. Should this occur we could see a quick move to 1.4079. A break above this level may result in moves into 1.4194, 1.4223 and 1.4259 before a pause. If we see a complete V-Reversal the GBP could rally all the way back into 1.4469.

On the downside, a strong break and close below 1.3853 could see a quick move down into 1.3743 – 1.3725 before a pause. If momentum to the downside continues we may see moves into 1.3683 and 1.3654. A strong break below these levels could see cable trade down to 1.3510.

 

USD/JPY – 113.97 ( +140 or +1.24% )

The USD/JPY continues it’s wild volatility as we go into a potentially big week for FX.

VOLATILITY ALERT: Retail Sales on Monday, NFP on Friday.

For a continued move to the upside we would like to see a strong break and close above 114.14. A break above 114.14 could result in a retest of 114.55, and if momentum remains strong we could see a move higher into 115.05 and 115.53 before a pause. If momentum to the upside is very strong we may see fast and sharp moves into 116.08 and 117.41.

If the USD/JPY cannot close above 114.14, we will be watching for a move back down to 113.37. A strong break and close below this level could see the USD/JPY move down to 112.40. If momentum to the downside continues we may see a retest 111.73. and 111.09. A break below this level could see a fast and sharp move all the way down to 109.94.

 

COMMODITIES

GOLD – 1222 ( -4 or -0.33% )

Gold was also sideways last week and as such our levels remain unchanged.

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 another 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. Should momentum to the downside remain strong we may see GOLD trade back down to 1187, 1181 and 1167.

 

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