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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 Short.
AUSTRALASIAN SESSION
ASX – 4958
It was quite a challenge for the ASX to break 5236, but as soon as it did, it reversed and headed south the whole week. The down move played out, and this was imminent once it broke past 5126 with real momentum. All of our downward targets were hit.
For this down move to continue we would like to see 4903 broken with the same momentum as last week. If this occurs then we will look for 4719 as our next target.
If 4903 provides support then a bounce back to 4982 could occur before another attempt at 5126 is made. If this is not defined then the ASX could range between 4903 and 4982 and 5126.
EUROPEAN SESSION
FTSE – 6684
The FTSE made one last attempt in the middle of the week which saw it break through 6796 to a high of 6876. But it could not sustain this move and soon found itself back below 6700 and eventually reached a low of 6637 which was 10 points below our short term downside target.
As mentioned in last week’s market brief, the other indices around the world helped with the FTSE’s downwards move as they took a leg downs as well.
For this down move to continue we would like 6647 broken early this week with a possible attempt at 6478 before revising further downward targets.
If an upmove is to take place then we would like 6722 to be broken with momentum early in the week, and a possible extension towards 6758. If this is broken and 6796 does not stop it, then we could easily see the highs of last week tested again.
DAX – 8338
The DAX made an attempt at trying to reach 8670 but fell short by about 100 points. Even in this market a 200 point climb was asking for too much without further stimulus to the economy.
The down move reached last week’s target of 8262 with a low of 8260, and if this is to continue then we would like to see this level broken with momentum before an attempt at 8003 is made.
If an upmove is to start from here, then we would like to see 8448 broken with strength before any attempt at the highs are made.
US SESSION
S&P – 1651
The S&P made a high of 1687 before making an aggressive move down to 1633, which was only a few points below 1637 – a level mentioned in our previous market updates.
It bounced off this area twice and has closed below 1660 which could indicate that 1660 is now a resistance level.
If the down move is to continue its march towards 1611, then 1633 needs to give way and break with momentum early this week.
Otherwise, the two bounces off the 1633 – 1637 levels could signal support, and a break above 1660 could see last week’s target of 1718 reached but only if the momentum continues.
NASDAQ – 2992
The NASDAQ has made the same pattern as the S&P and the outlook here could be the same.
If the down move is to continue then we would like to see 2961 broken with momentum. If this occurs then we could see 2873, and if the moves are aggressive then 2732 is our ambitious target.
Otherwise, the bounce off 2961 could be the launching pad for a move back past 3044 and another attempt at 3092.
FX MARKETS
AUD.USD – 9643
The AUD found itself in a freefall phase during the week and just did not want to stop.
With a low of 9593 it was hard to do anything but short the AUD last week so this week it is important to note that on 1st June 2012 the low was 9580 and this level could play a small but vital role in this week’s move.
If the downward momentum continues past 9580 then we will wait for some type of support, because if the RBA reduces the cash rate again, then the lower targets are anyone’s guess.
But if we see a bounce off this level, then we would like to see 9696 broken before we see 9744 and possibly an ambitious attempt at 9815.
EUR.USD – 12928
The EUR is stuck at the moment and it really seems unsure of what to do next. It struggled to break below our previously mentioned 12814 target and bounced slightly to a high of 12934, which was 7 points above our upper target of 12927.
For any real move to take place we would like to see 12769 broken on the downside and 13085 on the up. Otherwise short term plays are in.
GBP.USD – 15119
The GBP’s down move continued last week with a break below 15184 with a low of 15019.
If the downward move is to continue then 15184 needs to become resistance, and a break below last week’s low could see 14830 being reached.
If a new upmove is to occur now then 15184 needs to be broken and with momentum before reaching 15257 and then 15342.
USD.JPY – 10123
The JPY strengthened last week, and with all the intervention that is going on deciding on upper and lower target levels is somewhat irrelevant, as last week we saw a 300 point move down after further approval was given to the JPY to weaken. Yet a few months ago when similar approval was given we saw a 500 point move up. Caution is needed.
If the world markets continue downwards this week then there is a possibility that the JPY could strengthen, which could force the pair to dip below parity if 10087 is broken with strength. Also, if the strong negative sentiment around the equity markets continues then we could even see 9826 reached.
If this down move was just a bump in the road then we would like to see 10229 broken again and a solid break past 10317 before higher levels are to be reached.
COMMODITIES
GOLD – 1386
GOLD has had $50-60 ranges last week which shows signs of indecision, as the average daily range for gold over 10 years is approx $11-12 which is 5 times the norm.
As mentioned last week if GOLD is to stand a chance of any move up then it would need to hold above 1372 and move towards 1398, once breaking this level then a solid move towards 1476 needs to occur.
If we are to see the April low taken out, 1372 needs to break with momentum and the freefall could continue as the few who are left holding long positions might get out of their trades and push the commodity even lower.
Once again no attempt on downside targets will be made.
US LIGHT CRUDE OIL – 9382
LIGHT CRUDE again traded between some of our levels mentioned previously, as it made a high of 9733 which was 11 point off our upper resistance level and reached a low of 9219 which was 7 points above the low last week. But in saying that it finished above our midrange support of 9346.
So now if the down move continues then we would like 9346 broken and we could see 9019.
If this upward move is to occur then we would like to see 9346 hold before 9744 is reached again with possible resistance at 9582 and 9659.
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