Market Brief – Monday 4th November 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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 Light Net Long.

AUSTRALASIA

ASX – 5425

The ASX again had a late rally into the week staying within the Standard Deviation Channel, this time only closing one point higher than the previous week’s close. This week the Melbourne Cup is on, so trading could be thin and uneventful unless the overseas markets make a big move.

For the up trend to continue, we would like to see a solid move past the 5441 – 58 area before a push towards 5481 is achieved. With enough momentum this could see the ASX move towards 5549 which would complete the new range. This would put the ASX at the top of the channel and a revision will need to be made once it is reached.

If the ASX cannot get past 5441 – 58 area and the down move restarts, we would like to see a solid break back down past 5397. Once this occurs we could see 5320 reached. If the momentum is strong then 5275 needs to be broken with solid down bars, which could see support forming near the 5229 – 01 area.

EUROPE

FTSE – 6750

The FTSE continued its upward momentum early last week but fell away towards the end of the week to finish higher by only 25 points after being up by almost 100 points. The important thing to note, is that the FTSE has closed above one of FICM’s potential support levels of 6740, which will play an important role moving forward.

For the upmove to continue, we would like to see a solid break past the 6777 – 6819 area before we can see 6876. Once 6876 is broken and becomes support then the full range that was set in April – May can be achieved by reaching 6972.

If the FTSE breaks past 6740 – 6732 early in the week then we could see 6657 reached quickly. If this area does not provide support and another break occurs with long down bars then 6563 could be next, if the downward momentum is strong then once 6432 is reached this would complete the full range set in in Aug.

DAX – 9027

The DAX is moving higher but ever so cautiously, as once again, the enthusiasm is just not there. Trade View will be monitoring the DAX very closely for early signs of a down move.

The DAX reached new all time highs last week, and if the momentum continues this week the completion of the range will occur once the 9167 – 90 area is reached. To push through this level we need to see strong long up bars before we revise any upper targets.

If the DAX’s lack of enthusiasm is preparation for a reversal, then we would like to see 8959 broken early in the week followed by a solid break past 8865. Once 8865 is broken then we would look for 8778. If the downward momentum is strong and we see solid long down bars then if 8612 is broken we would look for some support near 8534.

US

S&P – 1759

The S&P moved higher in the week to reach new highs with the top of the range reaching 1778, but this did not last long and it closed at the same level as the previous week.

If the up move is to continue higher and complete the new range then 1777 needs to be broken early this week with long solid up bars. This could then push the S&P towards 1797. Once this is achieved we will look at the strength of the momentum and reassess our view.

If the highs are in for the year and the S&P starts a new leg lower then a move past 1752 could be the start. If this level is broken with long down bars then 1736 – 25 could be next. If this area is broken with strong momentum then 1712 – 1707 could be the next possible support, but will be tested.

NASDAQ – 3373

The NASDAQ had a sideways moving week, and although it went above 3400 briefly it did not stay there for long and retracted to close 9 points lower from the previous week’s close. We have also noticed some divergence in some of the secondary indicators.

If an upmove is to restart, then we would like to see 3379 broken early in the week followed by a solid upward move past 3400. Once this is achieved then 3422 could be reached. If this level is then broken with long solid up bars then 3443 could complete the full range.

If the NASDAQ slows down and a the rest of the markets move lower as well, then we would like to see 3351 broken early in the week followed by 3312 being tested. A solid break past this level could see the NASDAQ come back down near 3256 – 51.

FOREX

AUD.USD – 9436

The AUD continued lower last week as the USD started strengthening across some of the basket of currencies that make up the USD Index and has reached its downward range.

For the uptrend to restart we would like to see a solid break past both 9523 and 9599 before we could see 9653. Once 9653 is broken then 9702 would be the next level of interest.

A continuation of this down move would come at further USD strength and a break past 9370. This would then lead to a move to 9309 and finally 9189. If 9189 does not provide any support and the downward momentum picks up pace then a break back below 9000 is highly possible.

EUR.USD – 13485

It’s said with the USD strength, that when it comes it comes fast, and if you turn your eyes from it you might miss out. The EUR definitely missed it. We have made mention over the past few weekly reports to be aware of the USD strength coming. Pay very close attention to this.

If the EUR finds a way to get back up then we would like to see an early move past 13514 before we see a break of 13625. Once this level is broken then 13651 and 91 will be the difference between a rally back past 13809 or just another lacklustre attempt at a continuation of a rally.

If the strength of the USD is going to continue, we would like to see another solid break past 13432 early in the week followed by more breaks past 13397 and 37 before reaching 13223. If the momentum is still strong then 13176 – 65 could be the next test. If this fails then we will reassess.

GBP.USD – 15921

The GBP lost its strength again last week and has moved lower once more to complete the short term downward range. With the divergence evident and a possible topping of the GBP if the USD continues to strengthen then be mindful of the potential outcome.

If the GBP can find some strength after reaching its range then we would like to see a solid move past 16075 before reaching 16122. Once this occurs and if a break with long up bars occurs then 16260 will be its next test.

For the down leg to continue and really make an impact then a solid break past 15841 could start a move past 15722 and if the momentum continues strong then 15594 and 15503 could be reached quickly.

USD.JPY – 98.64

The USD is a hard currency to keep down for a long period of time. Small rallies can lead to more substantial long term strength for this currency. There is talk of alternative currencies, but the main question that should be asked is; which will it be?

For the USD to regain strength on the JPY, we would like to see an early break past 98.81 and 99.15. If the upward momentum is strong then we would like to see a break past 99.99 with long up bars leading its way towards 100.52. This level then needs to hold as solid support before the next leg up can occur.

If the USD goes out of favour again this week, then we would like to see an early move past 9820 followed by a solid break past 97.81 – 78 area before reaching 97.56. If this is also broken with strong long down bars then 96.72 could be tested next.

COMMODITIES

GOLD – 1314

Every time GOLD attempts a rally it is met with a solid wall of sellers, which can be quite taxing for those trading this instrument. Because once the buyers (bulls) give up, the sellers (bears) take complete control and there is very little that can stop them.

For GOLD to start a new uptrend then we would like to see 1335 broken early this week followed by a move towards 1353. Once 1353 is reached and broken then 1391 will once again come into play. The level 1391 needs to be broken and then become a solid level of support before the new move can occur.

A continuation of the down move could occur if 1306 – 1300 area is broken with solid long down bars. If the downward momentum is strong then a break past 1282 could lead the way to 1268 – 61 area reached. If this is also broken convincingly then if 1223 does not provide support GOLD could dip below 1200 once again.

US LIGHT CRUDE OIL – 94.58

OIL is definitely not the flavour of the month.

If somehow we run out of OIL in the next week or so and the up move restarts then we would like to see an early break past 96.56, followed by a strong break with long up bars through 97.45 which could lead to 99.45. If then we see another leg up 100.15 will need to be broken and then become a strong level of support.

If the down move takes a new leg down then a break past 93.44 could lead the way to 91.46. If 91.46 cannot hold the bears then 90.19 could be tested next. If the momentum is very strong then 85.69 is the next level we will be watching.

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