A Bigger Market Correction Due?

markets heading lower

Early moves this week has seen a distinctive risk off tone as markets digest the latest economic and political news. The latest comments from Mario Draghi’s address to the IMF, increasing tensions in the Ukraine and a news docket that will closely be watching US Retail sales figures have made traders somewhat risk averse at the start of the week.

Upcoming data over the next five days could help to define near term trends. Markets will be looking to the US in particular with the aforementioned Retail Sales figures and an address to markets by Fed Chairman Yellon on Tuesday and the Thursday putting the performance of the US economy firmly under the spotlight.

The Chinese economy will also be in focus midweek with GDP and Industrial production figures helping to paint the latest picture of global growth. Current expectations are for a increase from previous figures . However the capacity for the Chinese economy to surprise is well noted.

The risk off tone is likely to help Gold which continues to benefit from the risk off tone in markets. Pushing higher the metal has enjoyed further gains at the start of the week which add to the bullish technical picture on the chart.

For Stock binary options traders, there is a great deal of interest this week. Several major companies which can be traded through a Binary options brokers are due to release updates to the markets this week. Off these Google provides on the picks. The tech giant is widely tipped to report better than expected trading figures and could provide a good opportunity for a Call trade.

Key News This Week

calendar 14th April 2014

Forex

EUR/USD –Ending the week at 1.38840, we would look higher over the coming week. First support begins at 1.3820 with pivotal support is at the 1.3750. While the pair remains above this level we would look for a break of 1.3910 to retest the years high at 1.3962.

USD/JPY – Ending the week lower at 101.68, USDJPY is pulling back towards a rising support line which has been in place since June of 2013.  This currently sits at around 100.80. We would expect a break of 101.0 to see a bounce at this level.

USD/CHF – Falling heavily over the week USDCHF bounced from 0.8742. The outlook remains bearish however and we would look lower again this week following a possible corrective bounce. Support begins at the aforementioned 0.8744 level while resistance is at 0.8818 and 0.8840.

GBP/USD – The pair currently holds just above rising trend line support.  Expect further gains this week if this level holds. Support begins at 1.6565 which resistance is 1.6661. Bias remains to the upside while 1.6565 holds on a daily close.

Major Indices

DOW – Last week saw the Dow fall back heavily to end with the week at 16067. With 16200 taken out we expect the market to move lower. However 16000 will offer strong resistance. Look lower on a daily close below 16000. 16200 offers first resistance to a rally.

NASDAQ – Last week we mentioned a move below 4100 would see the Index end lower. This happened with the NASDAQ falls mirroring those of other major indices. Ending the week at 4003 the Index looks in danger of heading sharply lower this week. A rally and solid close above 4100 is needed to keep the bullish momentum going.

FTSE – The FTSE fell hard over the week to end at 6561. 6550 has proved strong support for the Index previously and we would expect it to offer strong support. A move below here exposes 6400 as the next downward target.

Commodities

Oil – The strong hammer signaled gains last week and we got the expected move higher. Ending off of highs, the Crude price closed at $103.58. $104.50 has proven strong resistance but the market has bullish momentum. Expect a further run at this level this week. Price should be supported above $102.50.

Gold – Yet again Gold found support at $1300 level last week which could prove to be the floor for this market. We could be seeing double bottom forming on the chart. Staying above $1250 keeps the bullish scenario alive. We would look higher but not just yet.

Stocks

Stocks reporting to them markets this week.

  • Monday – Citigroup
  • Tuesday – Intel, Coca Cola, Yahoo, GKN, Rio Tinto, SAB Miller
  • Wednesday – Tesco google, Bank of America, American Express
  • Thursday – Diageo, BlackRock, General Electric, Goldman Sachs, Morgan Stanley, Pepsico
  • Friday – No companies reporting