 Okay, welcome to today's weekly charting analysis webinar. My name's Jasper Lawlett, Mark Analyst here at SIMC. We've got the risk warning on the screen here. I will take you through that first. But a pretty huge week in markets. Not because of Jeremy Corbyn being elected Libra of the Labour Party. That certainly could be relevant for the UK economy and for UK stock markets. It's really all about the Fed this week. We could see a rate rise. A lot of people calling for it. And markets quite calm today. But I suspect that could be the calm before the storm. Because we've seen a lot of volatility recently. And a lot of it that comes from China. Thankfully we don't have much in the way of Chinese data this week. We had some over the weekend. We're actually mining companies. Some of the top performers on the UK 100. And they're tippling some of the most exposed to what's going on in China. So perhaps we've got to a stage where at least in the short term we're looking through what's going on in China and concentrating and looking more ahead to what's happening at the Federal Reserve. And at the end of the day what took place in China largely relates to the Fed keeping interest rates low. Emerging markets have been borrowing large amounts in US dollars over the past few years with low interest rates. But the chance of interest rates going up means they'll be paying more in their debt. At the same time China's economy is slowing. And the reason China chose to devalue their currency the other week was in large part, I think it's generally understood, because the US dollar had gone up so much in anticipation of this rate rise because the Chinese Yuan is pegged to the US dollar. So while their economy was slowing, their currency was picking up in value and damaging their exports. So it's going to really be about the Fed. We'll certainly look at the currencies, the US dollar being the main focus there of course. But we do have a fair few important economic releases before the Fed, not least inflation data for the US the day before on Wednesday. The Fed meetings are the final day of the meetings on Thursday when we hear their decision. We've also got UK and Eurozone inflation on Wednesday. So that will give us a bit more information as to what the timing of any rate rise from the Bank of England would be. It's expected that actually month-to-month inflation may have actually dropped into the negative because of the drop in oil prices. So if anything, the timing on a Bank of England rate rise is probably going to be pushed out a little bit. But we've also got the Treasury Select Committee hearings with Mark Carney. So that inflation data for the UK coupled with whatever Mr. Carney has to say about the prospect of a rate rise and how close the UK economy looks to a stage where inflation is actually going to start moving towards the target will be a major discernment in the direction of a pound. But gains probably are going to be fairly limited for any gains that might occur in the pound because, again, we've got that Fed meeting the next day, which is going to dictate the direction of the US dollar. So since we're talking about currencies and things, let's just dip straight into it. I mean, we've been talking about cable, so let's have a look at the British pound. Now, this is a short-term chart. Let's zoom things out a bit. First, we'll get that weekly perspective. So we were in an uptrend. One above this peak here, made a higher high, made a higher low, made a higher high again, but it's only just a higher high. And at that time, that's when I started to suggest that probably we were in for a bit of a deep correction because it only just slightly took out the previous high. It's more characteristic of a sort of range trade than a solidly performing trend. That's what happened. We ran into what became sort of a triangle formation and then a couple of weeks ago, we broke down through that triangle and now we're basically in this horizontal range. It's pretty much 152 to 158 is the range that we're working on at the moment. Now, it was quite a strong week last week that British pound pretty much undid all of the previous week's weakness. And so we basically find ourselves sitting in the middle of a range. Now, that tends to be a bit of a tricky place to carry out your trades and market to sideways. The highest probability bets are at the top and bottom of the range trading back into the range and eventually trading with a breakout. In the middle of the range, it really could drop down to the lower range. Again, could move up to the top. We don't really know. It may be odd, slightly favor. I move back towards the top of the range since the last place we were was the bottom of the range but that certainly doesn't always hold true. Now, with the context of that sideways environment, we can look to the daily timeframe. We see that we've edged above this low here. But what I tend to do is when there's a few lows in close vicinity, and you'll see this, I've done this in particularly the USFPX chart in terms of stock indices, I've got a few of these zones. I like this rectangle tool that we've got for the charting package because you can basically create a zone instead of a horizontal level. You see that we broke through that initial low horizontal level here. But actually, if you consider this a kind of support zone which is broken and now is potentially turning into a resistant zone, then actually we've really barely eked out of there. That's sort of capping the upside for the moment. The recent momentum obviously was strongly down so we've got a few places that gains could be capped on the way back up towards the top of the range. I would suggest this low here would probably be the next major one which corresponds with, depending on the timing, vaguely would correspond with a retouch of that broken trend line. And I think a lot of people will have this trend line. It's got one, two, three, four, five fairly decent touches. So I think that would be on a lot of people's charts and if we get a move back towards there this does kind of correspond with those lows there about and about the 156 hard number that could at least cause a bit of a roll over in price. What I tend to do which in a range trading environment doesn't really work so well. I think we've got to accept the fact that we were at an extreme overbought level. We went straight down to an oversold level. So really I think the range is just 20 to 70 at the moment. When you're in a strong trend you can highlight maybe the overbought area down to 40 and that would be our bullish zone. I'll show this in another chart that I've got a bit more clearly. A bearish zone would be more like 20 back up to 60. So if RSI stays within there it can help you define the trend. Again, I'll give a better example on the other chart. But for this example, I think we're really swinging between overbought and oversold very counter-tristic for sideways market. So potential opportunities in here but still again the best opportunities are going to be up the top here and down here. Let's look at the euro. Now as I mentioned we do have eurozone inflation this week and we obviously had the ECB last week which did initially cause a bit of a break higher in equities and sort of the euro push higher a bit but push lower sorry right immediately following the meeting. But the effect wasn't too long lasting. They didn't really introduce any more policy if you weren't following at the time on that day they really just adjusted the quota of how many bonds of a certain issue they can buy so they can now buy I believe a third of the issuance and that's up from a quarter. So definitely devilish wording rhetoric from Mario Draghi the ECB head and that's theoretically a cap on high how the euro can go but really you ought to say that even if eurozone inflation drops again which you probably will in August it's going to be the dollar end of the equation which determines the direction of the euro here. Now with daily charts a bit choppy and it's pretty, pretty difficult to trade but I think a bit more instructive if you jump out to this weekly chart you can see we're actually keeping quite well within the refines of a triangle pattern. Now we had a false breakout of the top of the triangle here. Now the only trouble I have with this is that we are moving closer into the apex of the triangle and really when you get into the final, the breakout wants to happen in the vicinity of the first two thirds, around two thirds in of the triangle. Into that last third the breakouts tend to be a bit choppy and unsustainable but quite a strong reversal to the downside there but we didn't get any follow through after that so a big bearish signal but no one quite willing to carry it down towards the lows that we saw in late July. So whereas in the pound we have that very much different economic situation for the pound and the euro but obviously both against the dollar both in a consolidation phase at the moment the euro in a tightening consolidation as I see it and the pound in that kind of rectangle range. Those horizontal ranges do tend to be the easiest trade because everyone can see those levels. The narrowing range it can just turn into a horizontal level. We get a breakout from this down here at the trend line but maybe we just go as far as that previous high and then roll over again. So a little bit harder to trade but both potential breakout situations here. It's more of a triangle I would say than something like a flag pattern tends to be a bit quicker to form but if it was a flag or a pennant then you would suggest that the next breakout would be down. This triangle pattern could really break given that it's downward sloping arguably and upward sloping it could break out either way. Could well be a Boston pattern and again if the Fed don't hike rates that's bearish for the dollar and we could see euro break in high which is my base case tonight by the way. I'm pretty aware of the possibility that it's very finely balanced and there are economists that are literally 50-50 split on whatever rate rise happens this meeting. I tend to think they'll just err on the side of caution. That's what they've been doing under the realm of the reign of Janet Yellen, the Fed chair. It's all been very cautious erring to the side of dovishness. So to me, with inflation at the level it is with the risks of what's been happening in China and possible, another temper tantrum take place in emerging markets I tend to think they won't hike and that may give a little respite to stock markets could see stock markets break higher and could see the euro in British pound break higher. Now let's have a look at Dolly Yen. Dolly Yen will be a big mover on the Fed decision. Before that though we do have Japan which is the early hours of tomorrow. There were hints in the news last week from one of, I don't know if it was Corrodas aides, it may have been the prime ministers but anyway one of the officials was basically indicating that the October meeting for the Bank of Japan could be a good time for further stimulus so that would suggest nothing's going to happen tomorrow but there's a bit of an idea in the background there that maybe the Yen could weaken further but I would suggest until that is a month away so again if the Fed don't cut I'd see their Dolly Yen dropping if they do hike Dolly Yen dropped it here get my words twisted here but Dolly Yen likely to drop off I think purely on that Dolla movement if they don't cut which I suspect they won't so the situation here is a bit like the British pound in a way with a clear break in a rising trend line we've had the retest already of that rising trend line and we've dropped back down not to the spike low but around the lows that formed the support previously here which is kind of where we finished that we closed at that former support level and then we found support there again we were in a range so I would suggest there are going to be some opportunities depending on how the candles work we're kind of struggling with the 200 day moving average at the moment but again I push into the top of the range around that 122 mark and again near that rising trend that's been broken could be opportunities to fade it over and then the support is pretty much the same but to me it's this level down to the sort of low here from the next day after that big break lower would take us back down to that 116 handle so let's shift over to the indices now Ashley I mentioned the US SPX chart it has to be a 500 basically now here you can see some of these zones now you can see that the support levels they are working it's just it's not a perfect science basically we dropped right down into the vicinity of this low we didn't quite make it to the very low about sort of 1820 but we got to 1835 and we've burst pretty hard from there and again here's the lows which you know I originally had this zone drawn more like this we have gone through it we've gone up to the 2000 mark obviously round numbers are another thing to watch so really now I've just redrawn the zone according to those highs that we've made just short of 2000 and this to me is the former support broken turned into resistance so we need to break through this resistance zone to have a chance of pushing up to again a fairly clear cut support this is just us chopping around sideways for all of 2015 until we had the big break and you know this is really the way markets work when you're in a very tight rain just like a spring getting coiled up and the longer it lasts the longer you stay in those kind of tight ranges the more ferocious the break out in this case extra ferocious because the bear market break tends to be sharper than an upwards break so you know saw that massive drop now this is just low volatility building up building up and then spike into high volatility so you know this just tends to be how things work my bias is that we either roll over from this current zone or you know perhaps if you see something along the lines of the you know the fair not cutting I think we push back into this range again perhaps roll over there from the broken trend line and maybe even just stay in a sort of horizontal range between these two zones calm down a bit and depending on how rhetoric changes at the Fed what's happening in China determined to whether we get a chance of pushing back into the records I would suggest sentiment's pretty damaged in stock markets now and we're probably going to need to see earnings improve a bit in the US fundamentally and just people to get through this this period of being being scared with these wide volatile swings in markets if we can see such a period of time then you know people will ease back into the stock market again but I think we're still probably to my mind in more of a sell the rallies depending on your approach if you break out trade obviously you're selling the break of the lows but you know broadly characterizing if you're a swing trader position trader you're selling the rallies opportunity more for me at the moment given the size of this move down you know you don't psychologically recover from that in a matter of couple of weeks typically now US 30 is very much the same I don't think there's a need to look at that I thought the S&P is slightly cleaner looking if we jump over to the UK now you know to these all these markets look pretty similar it's purposely remind ourselves of the weekly situation so I've just to remind yourself here just a few different things to remind yourself of what the trend is so you know one thing I've been talking about recently the 200 day moving average you know with a 50 day crosses below it that's the death cross I don't depending on the if it's a really sharp trend going on I'll have the 50 on there even the 21 but if there's a if it's basically a chop as it is now you know just leave the 200 on there so we're below the 200 that's bearish we formed lower highs so that I consider that a peak that peak so it's got two lower candles on either side and then that's obviously a you can actually that's got two two higher closes on either side so you can call that a big weekly low now so I've got big X there so the little ones of which are for the for the daily moves so general scenario for me is that we're we're trending down on a sort of weekly candlestick type time frame but if we go to the daily chart we can see we're actually putting in some higher highs high lows and I think we're I haven't actually got the 21 day but I think we may be above that let's just chuck that on there okay we can see actually it was worthwhile having on at the moment because that actually sort of is capping the the progress we haven't seen a close above there for a while so close above that 21 would be a good sign and then clearly just these two peaks which become a bit of a zone between here so we get the way I view this is yes it was a higher high so I'll put the X there but you know that's a reversal candlestick that's that's really a shooting star right there and so that's why we haven't really built on that break we know we're just rolling over basically so good chance of a test back down to the bottom range here and there would be some opportunities again long but up to me because that would be that because we're kind of in a sideways situation on the daily chart but just bear in mind that to me that kind of weekly trend is down and here's where I've got the RSI just we've got that big move into oversold and we've got these previous two peaks so for me while we're below those two previous peaks which actually corresponds quite well to the 60 resistance in a bear zone you know the bias to me is to the downside that's not to say we can't get a break back up to this support zone even the rising trend line just that should probably happen within the confines of this zone if we push about that and then rebound maybe rebound off the 50 again or something the more positive development for the UK 100 our proxy for the FTSE obviously got about 10 minutes to the end of the webinar here I'm going to cover the German stock index going to cover some commodities but if there is anything else you particularly had in mind you wanted me to cover that maybe I wouldn't otherwise then just send a quick chat message to and I'll see that to actually have the chat displayed I don't there we go okay so yeah good thing I had a quick look at that because yeah an update on wheat requested so I will get to that shortly now I know wheat is just bouncing off that long term support again so yeah we'll have a look at that for sure so so just to sort of cover some of the major industries here so we covered the US covered the UK now let's just look at Europe Germany is the biggest nation Europe, Germany says the DAX tends to be one of the most popular indices to trade looks pretty similar to the FTSE now we didn't have that shooting star but we did have a gap higher open on the same day and then filled the gap on the same day and so pretty much undone and did this sort of bullish implications of it closed back into the range again and this line here which was sort of eating around at the moment just corresponded if we look zoom out just to these these peaks that we broke through in January of this year in anticipation of QE we've mentioned this a few times since but QE basically announced in around March we made a new peak just at the start of April and that was it so we put it the beginning of QE pretty much called the top in the Germany 30 ironically because it was all just front run that's what this rally was anticipation of QE couple of weeks later top still a pretty sharp correction since then again partly in relation to what's what you know that's the chance of a Fed hiking you know it's affecting all the global indices in China and its devaluation of the Yuan means that the euro is relatively stronger against the Yuan and that hurts the prospect of for European exporters and China is becoming an increasingly large destination of exports now this this rising trend line has worked pretty nicely one of the low one up through here works quite well and we already kind of broken that but this is the next layer of it so you can see that this trend is just sort of decelerating and again just look at these X's here I'm just kind of classifying this as a as a bear market trend at the moment but obviously fully aware of the fact that we bounced off this surprising trend line and should we push higher into another higher high on the weekly chart that changes the focus and again on this daily chart it's pretty choppy but we can basically say if we just draw a line at the bottom here that this is our range and again just even if you trade in the short to time frames this is the market condition we're in so if we're down towards the bottom of the range you see an opportunity to go short don't expect it to go that far necessarily it could obviously be the beginnings of the breakout but you've got large daily support in the context of a sideways market so it's not going to be an optimum probability trade going short down the bottom of the daily range equally going along at the top and if you get some kind of confirmed breakout from again from the higher time frame so to me very similar characteristics of the UK 100 and to me the daily trend at the moment is sideways to slightly bullish slightly you know you could say these two these highs are kind of rising got a higher high there slightly rising sideways market we need a break either way to know to have a trend in place but to me because we're below again below the 200 day moving average and making low highs and lows on the weekly chart just to me says the general situation is a bit bearish and if I'm going long on a breakout or find at the bottom of the range I've got to be wary of that fact that it may not go the whole distance it may not go as far as it would with a trend on the high time frame bullish let's have a look at that week chart before I forget so I mean this is I already had this support and this is you know this is a high probability setup now we've missed that initial bit is the third test of this line and does it go back there now I forget I don't think so I think okay well we've got the support of that that longer term area just beneath us which is kind of what's playing what's coming into play at the moment you know we're just above that so it's a zone again so we've got that longer term support which you could sort of very roughly say kind of has been the basis of the range that we've been in so initial opportunities to buy in off this support but be aware that the trend is down it's down on the weekly chart we're below that fairly well defined four touches defined on that declining trend line but you know we weren't able to make a new low there we did make a lower high so we're still within this kind of what's becoming a bit of a sort of triangle formation and so sellers are getting more aggressive but buyers are holding out at the moment so this could go either way certainly could break down but historically with that with that longer term support there there's a good chance it could break the rising the declining trend line and again push into that 200 day which corresponded here also worth noting that the the RSI's got a pretty well defined support here sometimes the RSI will break before price does so if we see RSI moving below 38 to me that's you know that could easily be the the sign that price is about to break below that 460 area that we're holding at the moment so I hope that somehow I know I appreciate that I haven't dropped to a lower time frame but it's pretty choppy when you look at this in the daily chart I think the weekly chart gives you a bit more clarity here if you're looking for a bit more confirmation of where to take this rate you could suggest that probably just where we are now is maybe going to cause a bit of a setback and so maybe if we get the drop down here into the 470s where we're able to you know we stumbled there and then we pushed through it to me suggest that 470s area could be, could find some demand that would be a sort of lower price opportunity or just wait for a break without declining trend line for a bit more confirmation albeit at a higher price okay let's let's switch over to gold ooh we are actually running a little bit behind here when I hope not too many of you have to run off for the you know for the end of your lunch break gold chart very interesting at the moment so basically I've not just drawn this line in now this line was drawn in off these off these lines here you know we already had sort of four touches and then just extended out here in case it could help market find a bit of support we got to spend it nicely to that 1-100 level until we formed a bullish reversal pattern off there not as bullish as it could be still a lower close for the day on Friday last week but nevertheless a hammer pattern and we're edging below that 40 level at the moment so we're bullish while we're above the 40 you know this is an example of the kind of bullish range type idea where we got overbought as long as it holds down above 40 we're good but looks like we're pushing down below there as of today but obviously we've not closed today yet so there's no you know wait for their close of the candle because this easily could push into the low again and form another little nice tail to suggest that there's buyers at 1-100 but this rising trend line plus the plus the reversal pattern plus the round number few supportive ideas to suggest we could get a push higher but this previous low will be the first barrier they need to get through so basically you could call it the 1-120 which is what I said in the chart forum you know close above there definitely increases the chances that we can push back into the 1-150 type area where we form that lower high but again you know there's a nice concluence of support here but the trend is down on both a weekly time frame and daily time frame now let's just what was the last crude child idea I think the last one I did was WTI worth mentioning in terms of data that the last inventories data we got was quite bearish it was a surprise surprisingly higher build up of yours oil stocks and it looks like OPEC probably aren't going to have an emergency meeting just the scheduled one in November so two quite bearish things for crude oil nonetheless we had that big push off the lows so it's a bit like that sell-off in stocks you don't necessarily want to immediately go against that equally with this big bullish push here where we rose in the region of 8% and 10% a few days, three days in a row we're consolidating off that at the moment now this could still be a bullish pendant so if we drop down to a four hour time frame you don't even need to draw the lines you just know generally what we're dealing with here something along those lines similar off the lows I would argue it's probably there's more deserving of a horizontal level on the lows so a push above that the climbing trend line suggested to me that we could get another leg maybe not quite as ferocious as that but pushing up here at least into the high to 49 maybe up to 50 and we roll from the round number I think that's about it I think I've covered some of the most important things for the week obviously it's all about the Fed really so it's all good that basically the week is going to be a build up to the Fed rate decision even though we've got some significant data like US retail sales the BOJ meeting, US industrial production CPI from the US, Eurozone and UK all of that, UK unemployment rate even the Treasury Select Committee hearings we've got all that but it's that could be some cause for volatility and positioning so some opportunities to be had there but I tend to believe that even though we could get some volatility, some moves swinging around in the short term probably not going to see any established trends until Thursday and we hear from the Fed I hope that was useful everyone good luck with trading this week Shaspal Law signing out