 Right, let's get started. Welcome to this Monday market preview of week beginning the 22nd of August and this weekly webinar with me Michael Houston in place of my colleague Jasper Lawler who's decided to take a long weekend. So you'll have the pleasure of my company first and foremost to have to get the housekeeping out of the way, the risk warning. So nothing that you hear on this video should be construed as financial trading advice or what have you but certainly in the context of what we're expected to see this week. I think it's quite likely that I think it's quite likely that it's probably going to be a fairly quiet week I think market wise. I'm not really expecting too much in the way of volatility but certainly what we are seeing in the early hours of this trading week is a little bit of weakness first off. I don't think that's too much of a surprise given where we've come from over the past few weeks. We've seen some significant gains over the course of the past eight weeks and I think we've been well overdue a little bit of a correction. Certainly we've seen that in the last few days. Last week we posted the first negative week in eight on the FTSE 100 and we're now testing the lows that we saw at the at the beginning of the month around about 6805. I think a large part of the weakness that we're seeing thus far over the course of the past few hours has been I think largely as a result of a slightly stronger dollar and a slightly stronger pound. Certainly in the case of the FTSE which is FTSE 100 and as well as the FTSE 250 seeing a little bit of weakness on slightly weaker oil prices. Last week we saw a very nice short squeeze in crude oil back to around about $50 a barrel. I certainly think an awful lot of that rebound in oil prices was probably not justified by the overarching fundamentals of the oil price. That being said I think OPEC had a vested interest in trying to put a floor under prices around about $40 a barrel. Certainly they've been successful in keeping a floor under prices and I think the big question now is where do we go to from here? I certainly think in the context of equity markets and we're going to start with them is that we are trading broadly sideways but with a slightly upward bias. Now we do have support around about the $6,800 level on the FTSE 100 and I've indicated that with this support and resistance line here on the FTSE 100 chart but we can certainly see in the context of the overall oscillators we are starting to roll over and that does seem to suggest I think that there is a bias for a little bit of downside pressure as we head into the bank holiday weekend and we do need to be mindful of that as traders that as we head into bank holiday weekends liquidity particularly in August does tend to dry up somewhat and I think that does tend to make traders a little bit more cautious. We've also seen some mixed messages come out of the Federal Reserve over the course of the past few days and I think that has also fed into the slightly more negative narrative that we've seen in the direction of the way the markets are going is slightly stronger dollar and I think if we're going to start anywhere with respect to the dollar I think we need to look at the dollar index and this particular chart here. If we look at the trend in the dollar index over the course of the past nine months, eight or nine months, if we look at this downward trend from this long-term trend line here we are in a broader consolidation phase on the dollar index. Now an awful lot of pundits out there are still fairly bullish on the dollar and I think an awful lot of that is predicated on the fact that an awful lot of people still expect the Fed to raise rates. The big question is by how much are the Fed going to raise rates and will the Fed raise rates? Now at the beginning of this year if you cast your mind back to January Stanley Fisher Vice-Chairman of the US Federal Reserve Janet Yellen's number two suggested in comments to markets as we headed into the new year that four rate rises this year was very much in the ballpark. Now an awful lot of people expected the Fed to have raised rates at least two or three times by now. I was probably one of the few people who was very very skeptical about that and I still remain very very skeptical about the probability of the Fed raising rates more than once. I still don't think that the Fed will raise rates in September and if they do raise raise rates at all then I think the likelihood is they'll do it in December if they do it at all. The Fed have been very very good in trying to manage expectations about the about the prospect of a rate rise and Stanley Fisher's comments on Sunday about the central bank being close to meeting its inflation and employment targets I think are designed to try and keep the prospect of a US rate rise on the table. Ultimately they're not really telling us anything new. The central bank has been close to meeting its inflation and employment targets for the last nine months so its comments at the weekend are really not adding anything to the overall debate and ultimately I think what they're doing is they're making the markets think fear that yeah the Fed are jaw-boning again whatever let's move on tell us something we don't already know because ultimately I remain very very skeptical about the Fed's ability to raise rates at a time when every single one of their central bank peers is very much steering monetary policy in the opposite direction and that monetary policy divergence is going to make it very very difficult for the Fed to raise rates irrespective of what Fed policymakers will say to the market and ultimately I think that's what markets are looking at they're looking at the divergence in monetary policy and ultimately thinking well you know the gap is already fairly wide as it is we're expecting four rate rises this year we haven't even had one yet and the likelihood is we'll be lucky to even get that where does the dollar go from here and that I think more than anything is what's driving markets at the moment it's not what the Fed is saying it's what they're actually doing and the Fed are at the moment not doing anything and that ultimately is what's going to drive policy further we look at the technicals of this chart here we can see that the lows we can see that the highs the peaks in the dollar index are getting progressively lower we've got this line of lows here on the dollar index if we break below this key trend line support here on the dollar index and we break below 94 then I think there's a decent chance we can see further dollar weakness over the course of the next few weeks and months and I think that will be reinforced between now and the September Fed meeting now you're going to hear an awful lot of chatter about what to expect from Jackson Hole later this week when Mrs Yellen talks on Friday ultimately in the past previous Fed chairman Mr. Bernanke has indicated at this particular symposium he has given clues about the direction of future Fed policy in this case I think that's unlikely the title of the symposium is redesigning resilient monetary policy frameworks for the future ultimately the Fed is struggling to deliver forward guidance in what essentially I think at the moment is a new low growth low inflation environment and ultimately it's 2% target for monetary policy is prove inflation target for monetary policy is proving to be somewhat outdated and the Fed as well as other central banks need to come up with some new tools other tools to really manage monetary policy in this new low growth low inflation environment ultimately I don't think anyone wants to go down the negative rate route well some more than others Bank of England certainly I think in cutting interest rates earlier this month and very much I think in embarking on further QE if last week's economic data is anything to go by now yes it's early very early days with respect to the UK and I think that is I think that is tempering some people's attitude towards the pound I think there is an expectation that the pound will weaken further but I am a bit skeptical about that and I will go into the details of that later let's have a look at the S&P we can see pretty much the S&P's doing pretty much nothing if we look at the key supports on the S&P I'm looking around about 2170 on the downside or that that particular low there that we saw the other day in the middle of last week which is around about 2168 so you're looking at 2170 as a support level on the S&P again I think it's going to be very unlikely that we're going to make any significant inroads to the all-time highs that we saw earlier this month and I think it's going to be a similar story on the the US 30 as well we can look at these this series of lows through here I think that's going to be a very very tough act to break I think we're pretty much directionless overall we're going to continue to trade sideways on equity markets simply because I don't think there are any significant drivers of any significant drivers for investors to really take on large new positions ahead of September when an awful lot of people will come back and take a fresh look at what markets are doing ultimately all the oscillators here are pointing to further sideways consolidation we've seen these highs here we haven't really broken significantly above them and ultimately I think if we're going to see new highs we need to see some new catalysts and ultimately I'm struggling to see where those catalysts are coming from we've seen further M&A this morning with the news that US pharmaceutical giants Pfizer is looking to pay 14 billion dollars for motivation a small California based drug cancer drugmaker that's ultimately the ultimately why we're seeing that is US companies and companies in general have no better use for their funds so where are they going to do what are they going to do with it if they're not going to invest it they are going to look at acquisition targets at the moment we're seeing weakness in equity markets a lot of that is being driven by weakness in the oil price so let's look at that for our oil trade for the oil traders amongst us earlier this month we saw a nice sharp reversal a bullish engulfing week now those of you who look at the chart forums on a regular basis will know that we regularly update these and on the 8th of on the 8th of August last week saw a bullish daily reversal which could see a move back towards $45 a barrel mark we certainly saw a move well beyond that now we've seen a significant decline and that does appear to suggest that probably what we're going to do with respect to crude oil is pretty much define a fairly new range we're going to be fairly we're going to struggle I think much above $50 a barrel $51 a barrel for the simple reason is that's the supply and demand dynamics haven't changed the reason we rebounded from $40 a barrel was I think OPEC producers wanted to try and put a floor under prices but ultimately they're going to struggle to really move much above $50 $55 a barrel simply because there's still too much supply relative to demand this morning we heard news out of Iraq that they're going to increase their exports by 5% and we've got a we've got a slightly stronger dollar today and that is pushing down on oil prices as well when you put those two factors together ultimately what you've got is an ideal combination for what I would call a fairly new range and I think this range is defined by these peaks here that we saw in June and these lows here that we saw earlier this month we've come from pretty much a bear market to a bull market I think it's too early to define a clearly definable trend for crude oil since the lows that we saw in 2016 and I think what we're trying to do now is just trying to define a new range for prices we've still got the meeting in LG is which is due the 28th and the 29th of September so ultimately I don't expect to see significant downside for oil prices ahead of that meeting because any time that we get anywhere near to the lows that we saw earlier this month you'll get fresh OPEC voices coming out and talking about the prospect of a freeze in output but a freeze in output when output is at record levels is not going to work off the supply that we're still currently seeing in prices so at the moment we're looking fairly toppy around current levels on the daily chart that's not to say that we won't get a bit of a rebound over the course of the next few days but certainly I think if we close where we are today this suggests here that we're probably going to correct back down towards around about 48 46 dollars a barrel over the course of the next few days it's a similar sort of story for WTI the rig counts have gone up again this time by another 10 to 491 now two weeks ago we were at 465 so basically we've gone up 25 rigs in the space of two weeks again I have to see how this pans out on WTI but I'm looking at 46 dollars a 70 46 dollars 70 on WTI to hold in the short term but if we break below that then again I think we'll probably track lower in terms of WTI prices and again find support around about the 50 day moving average around about 45 dollars a barrel now I talked about the dollar and I talked about the pound I think there's potential for the pound to have bottomed out and there's a number of reasons why I think that I think there's so many people are bearish on the pound it's becoming a little bit of a one-way bet and everyone is expecting the Bank of England to cut rates further towards the end of this year now they could still do that but given the data that we saw last week unemployment data coming in or remaining at a multi-year low at 4.9% still recording the highest levels of employment since 1971 when records began jobless claims dropping 8000 now I know what you're going to say it's still too early to draw any conclusions with respect to what the UK economy might do and you'd be absolutely right it is too early but ultimately the bets are so bearish and we were given to believe that the bottom would fall out of the UK economy in the event of a Brexit vote that clearly hasn't happened US UK consumer confidence at the end of July fell at its fastest level for 26 years we were assured that the sky was going to fall in and yet retail sales in July jumped 1.4% so basically the UK consumers despite the fact that consumer confidence fell off a cliff went out spent money so UK consumers are telling people one thing and then going out and doing something else ultimately and I've always been skeptical about this you any consumer confidence indicator generally it's about as much use as a chocolate fire guard in my opinion ultimately I take my I take my cues from what consumers do not what they say and ultimately the hard data is telling me that UK consumers aren't as fearful as cons consumer confidence indicators suggest they might be ultimately people just get on with it 17 million people voted for Brexit so are you seriously now telling me that those 17 million people are going to stop spending they're obviously not that concerned about it they could they're pretty much sanguine about it and certainly the fall out since then suggests that they continue to be so more importantly we've managed to stabilize pretty much between 128 and 133 134 over the course of the last couple of months so let's look at the weekly charts here so the weekly charts we are we are trading broadly sideways in in what I would call a fairly broad sideways consolidation but ultimately I think the key for me was the fact that we didn't take out the lows that we saw in the aftermath of the Brexit vote and I think while we continue to hold those lows I think the risk is that we get a short squeeze higher and that's pretty much borne out not only I think in the context of cable but also in euro sterling because if we look at this here just redraw that this is the thing we're technical analysis you can listen to all the pessimistic as much pessimistic rhetoric as you like ultimately the price action needs to support that pessimism and at the moment the price action doesn't support the pessimistic rhetoric that I'm hearing from an awful lot of commentators so yes we did basically take out these series of lows here we tracked lower we didn't make a new low we rebounded here so now I think the real the real big question is if we drill down even for even further into the detail let's trade on levels so for me now the next big level is 130 20 so as long as we stay above 130 20 on cable then I'm fairly optimistic that we can probably push back through 130 120 131 here and retest the highs that we saw last week if we can then take out 132 then I think we can go back to 133 80 it's about levels if one level doesn't break and holds then really you have to reevaluate on a fairly regular basis and ultimately I think there's probably more room for sterling to rebound than there is for sterling to decline if we break 130 20 I will reassess that outlook but ultimately what I'm looking at here is we've managed to hold above the 128 level we've taken out this series of highs through here around about 130 20 we've managed to hold above 130 which means that now I'm looking for a retest of 130 180 if we retake 130 180 and get above 132 then I'm looking to retest the test this trend line from the highs that we saw here which currently comes in around about 133 20 so that's what I'm looking for next given that the oscillator has started to turn slightly more positive look for a move higher on the back of a weaker dollar and a stronger pound because despite the fact that the dollar has rebounded over the course of the past day or so I don't think that's sustainable and certainly that's not being borne out in Euro dollar charts either we still continue to trade in a broadly sideways consolidation with respect to Euro dollar the top is around 114 we're bottoming around 110 ultimately I think Euro sterling has potentially topped out the reason I think that is simply on the basis of what the long-term charts have told me and it and I can and I can basically analyze that from this chart here we've managed so far and this is why I can't get overly bullish on Euro sterling despite the fact that people are calling for a move to parity or to 90 cents I look at my monthly chart here could we go higher it's possible but let's look at the key resistance levels on Euro sterling first and foremost we've got the order we've got the peaks here just below parity at 98 so an awful lot of people are calling for parity despite the fact that we didn't even get there at the depths of the financial crisis in 2008 when everyone thought the UK economy was going to implode so that for me tells me that you're arguing for a worse scenario than was the case in the financial crisis when the VIX was at record highs and when basically everyone thought the bottom was going to fall out of the UK economy personally I just don't buy that I can't imagine a scenario that will cause the pound or cause things to be that bearish against the Euro which in itself is struggling in terms of negative rates in terms of its economy you've got to basically look at it in the context of the fundamentals basically you're painting an Armageddon scenario for sterling now we could still get there but at this point in time I just don't see it so if you don't buy into that narrative you've got to look at where the next key resistance level is and that's at 87.10 and we did overshoot by a few points to 87.20 but ultimately we've resisted the 61.8 Fibonacci retracement level of the entire down move from the highs in 2008 to the lows in 2015 so 87.20 the highs in 2013 88.20 between 87.20 and 88.20 is a huge huge level it's going to take something really substantial to push us through there which to my mind means the balance of risk means that the likelihood is we could get a correction from 87.20 down through 86.10 towards 84.90 over the course of the next few trading sessions based on the fact that both charts are looking very overbought both monthly and weekly the daily is starting to roll over the price action appears to suggest that at the moment we could well roll over further so while we're below 87.20 I'm a seller of euro sterling on rallies below 87.20 looking for a break below 86 towards 84.90 I certainly don't buy into the narrative that we're going to 90 we're going to parity at this point in time you trade at the chart you don't trade the sentiment and at the moment the sentiment for me hasn't doesn't suggest that we're going higher yet if at all while we're below 87.20 for me I think you have to you have to be sensible look at what the chart is telling you and suggesting that perhaps maybe we're going to correct the lower before we go higher let's move on to dolly n dolly n again again here dolly n the rebounds in dolly n a feeble that suggests to me that it's going to be very very difficult for or it's going to be unlikely that the Fed will hike rates what's needed for dolly n to rally is for the US monetary policy and Japanese monetary policy to somehow come to come to an arrangement whereby the dollar will rally I think the only way the dollar will rally against the yen will be if the Fed hike rates by hikes rates by more than is expected or sentiment changes towards the Fed hiking rates I don't see that happening and until such times as we get back above 103 in dolly n then I think the potential is for us to move to 95 now what's going to what's going to prompt us to do that well ultimately that's hard to assess but certainly in terms of the rebounds that we've been getting off the lows those rebounds are beginning getting progressively lower that suggests to me that until such times as we get back above these peaks here then the likelihood is we could track lower in dolly n now at the moment we're finding decent support between 99 and 100 and that does mean you have to be careful about being caught short but ultimately given the direction of travel here we've got a peak here we've got a low there we've got a peak here I've got a low there that every single rebound off those lows is more feeble than the last and until such times as that dynamic changes then you have to trade what the market is doing you have to trade into the you have to trade it you have to trade into essentially the the rebounds so until such times as we take out this series of peaks through here then ultimately fading the rally is a sensible thing to do with a stop loss inside the Ichimoku cloud that I've got on the chart here on this daily chart here right first let's finish up with the Aussie dollar because that's played out quite nicely from a technical standpoint on the daily chart let's look at this weekly chart on the Aussie here draw a line from these peaks here thus far this is 2013 peaks which the market is respected really well and respected really well last week now we have traded higher since the lows in 2016 it's interesting to note that the Australian dollar rebound coincided with the commodity price rebound the rebound in oil prices the rebound in iron ore prices we've struggled to maintain that and ultimately while the RBA wants a weaker Rossi it's one of the reasons why they want the Fed to raise rates it wants to do it wants the Fed to do their heavy lifting for them at the moment we are continuing to track lower finding a little bit of support around about 75 80 76 level but ultimately until such times as we take out this downtrend line here from the Aussie dollar then we're probably going to track lower what's going to cause the Aussie to weaken maybe weakness in commodity prices certainly in the context of what the Fed might do it's very difficult to really assess where the Aussie goes to next but certainly in the context of what the price action is telling me again we're looking to fade the rally here maybe weakness in commodity prices is going to keep a lid on it maybe expectations are further RBA easing as we head in to year end as those those yield differentials narrow but certainly from what I'm seeing here Aussie dollar is looking a little bit toppy around 77 but I don't think we're going to drop sharply probably find a few bids around 75 if we see them going to finish off with gold prices because we've seen a bit of a sell-off this morning on those hawkish Fisher comments but ultimately if I look at gold prices I see no reason to be bearish about gold as long as we're above $1300 an ounce I think ultimately we're probably going to take out $1392 but that's really the big level on gold $1392 the trend is clearly up for gold prices but in the interim I think we're probably going to find support around about $1300 an ounce and resistance around $1400 an ounce in this case this is pretty much a range trade on gold and ultimately I'm not going to read too much into a little bit of short-term weakness because ultimately when I look at this horizontal line here I can see there's decent support around about $1300 an ounce so what are the key things to look out for this week well most of the most of the data that we've got coming out this week is probably at the back end but certainly something to keep an eye on in terms of Euro is the French and German flash PMIs which are due out tomorrow they're going to be fairly I think they're going to be important in the context of whether or not we're going to see a pickup in Q3 after a fairly a fairly weakish Q2 for French and German GDP we've got French and German GDP numbers out later this week we're expecting German GDP to be confirmed at 0.4% French German French GDP at 0% in terms of US and UK GDP they're due out on Friday they're likely to be confirmed at 0.6% for UK GDP and for US GDP to be coming around about 1.1% 1.2% significant slowdown on what was expected initially but ultimately as a result of a slightly weaker consumption personal consumption number which came in at 1.7 ultimately everyone will be looking for Janet for any clues from Janet Yellen on Friday but ultimately I think what we're going to expect to see today is a fairly quiet week sideways consolidation slightly I think slightly more sterling strength than weakness but pretty much an uneventful week does anyone have any questions on anything that I have you haven't as yet covered thus far I hope I've covered everything but if I haven't any questions please address them to this message that I'm just about to send okay well in that case your own mechs well that's a new one okay I'll have a quick look at that see if I can find that I don't know if it's in my watch list no it's not so I'll find it for you well no prizes for guessing that's a decent uptrend yeah okay well we're a slap bang in the middle of the range of that one decent support just above 20 we can draw a nice decent line in through there let's try and drill down a little bit into that if we can resistance at 2080 that looks like a nice little head and shoulders reversal we've met our target there now got I mean to be quite honest that's pretty much a sideways consolidation we're looking at resistance of 2130 support 20 if we from what I can see here is we've found a little bit of a base down here if we break through 2080 we'll probably come back to around about 2110 2130 but overall this is pretty much doing what euro dollars been doing over the course of the past few weeks and months and trading in a sideways range let's try and put an oscillator on that see if we can try and determine whether or not there's any sort of momentum behind this particular move here I always tend to use 1063 or wrong one that let's get rid of this one get shot that one okay yeah so for now resistance at 2080 so we put a stop loss above 21 look for a pullback to around about 2060 2050 overall in the short to medium term on that particular chart there hopefully that helps it's you know it there's there's not really much to say on that chart any other questions okay well I will post this online later this afternoon for anyone anyone who wants to listen it listen to it back otherwise thanks very much for listening ladies and gentlemen and I hope you have a productive and successful week successful week trading thanks a lot for listening