 Okay, welcome to this week's Tossing Analysis with myself, Jasper Lawler, Mark Analyst here at CMC Markets. We have the risk warning on the screen at the moment. We're just going to get through that and start the webinar very shortly. If you do have a question about the webinar, please send it through to our chat window. If it doesn't look like I'm responding to it, we do have two methods of sending messages here. If you could just try the second method, then I'll typically see it. And the plan is to get through a few topics and then get to those questions towards the end. The whole thing should be wrapped up in around half an hour. So we have my next generation platform on screen here. I hope all are seeing that, okay. Last week was a busy one. We had the week finishing off with the non-farm payrolls. But importantly before that, we had the ECB interest rates setting meeting the year in Central Bank. And just to add a little flavor to things, we also had these protests over in Hong Kong. So in terms of stock markets, it was quite a big sell-off throughout the week. And then just sort of bounced back Thursday, Friday, particularly in the US markets in anticipation of and then resulting from the strong non-farm payrolls number which ended up coming in ahead of expectations at 248,000. The previous month, which had been a bit of a worry, was revised higher, up to 180,000. So still comfortably 200K plus unemployment as jobs growth in the US for the third quarter. So that's all good news for the US economy. And in terms of markets, you know, helping to support the strong trend in the US dollar that we've been seeing and partly offsetting some of the international problems that have caused the correction in stock markets. So this week, probably the FOMC, the Federal Reserve in the US, their meetings, their meeting minutes on Wednesday will probably again be the focus because keep in mind that the end of this month should be the, I mean, October this month should be the last month of quantitative easing. The US FOMC are expected to finish the tapering and so starting November, there will be no quantitative easing. So from then on in, the expectation is that the US are going to raise interest rates and people will start already have done and are expected to continue to put their money in US dollar based assets just to earn the higher future expected interest rates, especially when compared with the Eurozone, which has seen increasingly deteriorating growth and we can see that quite easily when we flip over to the Euro against the US dollar. This is a five minute show up but if I start off on the weekly perspective, this is kind of what we're dealing with here. Now there was a couple of areas that, you know, the Euro had the opportunity to bounce back and maintain some trend but really having broken this wedge pattern and even didn't linger around at what I thought might have at least caused a little temporary bounce in the market, the 127.50 around these lows just smashed straight through it that week, ended way below, following barely any correction of the previous week, pushed us right through the gap from September 2012. That didn't offer any support. So we've been down as low as 125 and we're just getting a bit of a bounce based on that round number type support. Notable that, you know, we're on the top of the US dollar just comparing it against a broad set of currencies. By the way, we do have the US dollar index available for trading now so you can actually see the US dollar against a broad set of currencies. I'm yet to actually do some analysis on that but it should be able to just show you that in case you weren't aware. Oh, I've actually got it there. So we've got two futures options there. December would be the most actively traded and that's the one that we've made available. So you can see that's a day chart. I believe the cash product is on the way where you'd see a longer history of the product but just so you're aware that would be a way of trading the US dollar. But if we have a look at the dollar yen, this has also recently hit 110 and caused a bit of a reversal. Subsequently it went back straight away to test it. And then the British pound, we've hit 160. So some big kind of significant round numbers being hit by the US dollar here. So these are some levels in which the strength of the US dollar is going to be tested. Essentially the US economy has done its part in terms of producing the numbers with the non-farm payrolls release. So that's why the meeting minutes will be interesting just to see how the Fed is squaring up against these strong data points from the US because obviously that's the point, it's a strong economy, but the Fed have to respond to that strong economy with the idea that they're going to raise interest rates just because the low interest rates are not necessary anymore to stimulate the economy. The other reason that we've seen a bit of a dip in stock markets and that's maybe, in Germany there's actually multiple reasons that we've seen this dip. This is a daily chart, you can of course see it quite well on a weekly chart. We could be looking at the prospect of a head and shoulders pattern here. There's the left shoulder there, that's the head, that's the right shoulder, and then so just a break below these perfectly matching lows. That's 8,900 essentially. That would be the trigger point of a reverse head and shoulders and that whole height, that head, would then be projected down to below 8,000 I believe and down towards these lows and the 200 week moving average. But there's been various reasons for the declines, one of which has been the poor data out of Germany and so something that people have their eye on today was the factory orders. They actually came in pretty poorly, but just because of the strength of the US jobs data on Friday, the sentiment of markets is generally quite positive and so far the German index is managing to kind of brush those off, but that's really kind of the bullish sentiment from the US is kind of overlapping it for now, but really it's more data to suggest that the German economy is weakening. So that's not a positive for the German index and it's not a positive for the euro. The other thing that's been causing a pull down in prices is China, so that's why on Wednesday the HSBC services PMI will be big one, it will be big for economies like the Eurozone in the US that have a lot of trade with China. It could cause this drop in the DAX and the German 30 to extend possibly the first sign that this head and shoulders pattern will break down would be a break of this rising trend line that we've had on this chart and seen for multiple weeks now with a few touches on there, almost another touch, but a breakthrough that would be the first sign that that one's going to break and some poor data out of China could be a trigger for that to happen. So this was a pattern we had on the chart for a while and it's worth noting that we've got this longer term head and shoulders but sometimes you see it in the oscillators as well in this case we had quite a nice head and shoulders which did play out. We've just bounced off the 30 level here and as you can see we've got a good bounce towards the end of last week but the trend is still decidedly down. So for trading the DAX, the German 30 probably want to see a break of this line alternatively you could draw a similar trend line at least using moving averages just give us a bit of an indication that the trend is reversed even though we've seen a bounce so far it's just a bounce within a downtrend. So it might require, that looks good for now but didn't quite reach the major support from this trend line so we saw that pattern off the support line we'd be feeling a bit more confident about it but there is still some room for some further downside so just a break of that line and confirm that we're looking good again in the Germany 30. As far as the UK, similar global influences I've talked about China obviously that the protests in Hong Kong sort of ongoing uncertainty and largely brushed aside by US markets by the end of the week just on the strength of the US data and it does sort of tend to look like the authorities there realised they made a mistake with tear gassing on the students and the first day of protest and subsequently the police presence has been fairly minimal and they're hoping that these students just run out of steam having been on the streets for over a week now so that's an international consideration I mean that could certainly flare up I think the only thing that would probably cause problems for markets would be again if the authorities stepped in and looked a bit heavy handed but economically this week for the UK is probably more significant than most of the economies the big one being on Thursday we have the Bank of England rate decision the data has slipped back a bit in the UK as of late and that's part of the reason we've seen this big decline in the British pound when compared to the US dollar it hasn't been able to hold up as well as some might have imagined post the referendum there has been a bit of a weakening but still many are predicting that the Bank of England will be the first to hike rates even ahead of the US so some indication as to how valid an opinion that is will come from the rate decision there isn't expected... I mean given the slight slowdown in data there isn't expected to be any more dissenters than we've had previously there are currently two dissenters in the decision to hold rates steady two obviously voting for a rate hike so any sign that there are further dissenters which we'd only know until the minutes which don't come out at the time of the rate decision will give us a clue as to whether there's any increased likelihood of a rate hike from the UK tomorrow there's industrial production and manufacturing production figures from the UK that will be important just ahead of the meeting just to give us an idea of this slowdown a slight slowdown that we're seeing is still occurring or whether we're going to sort of bounce back maybe it's just a slow summer the other consideration in the background and slight change of the guard for the UK economy is that there's been a couple of indications that the housing market is finally actually slowing and so highest prices actually decreased by a couple of surveys and we have the Halifax and Rix house price indices this week so it'll be interesting to see if they also follow suit to show a slowdown in the housing market because that again does actually take the emphasis take the pressure off the Bank of England to high rates so as far as looking at this chart we've got in front of us the UK 100 it would most likely benefit from a Bank of England that is more hesitant to raising rates the fact that the UK economy's been doing so well has been almost an issue for the index just because that rate hike has been on the cards for a while now so if the economy can improve but a few indications like maybe the housing market can sort of take the pressure off the Bank of England at high rates and maybe this index has a bit more chance of breaking this 6900 handle but as of right now you can see better on the weekly chart it's really kind of range bound and what's worrying here is that it's range bound and yes we made a couple of lower highs here but recently it's been in this rising channel and so really just to kind of maintain the bullish momentum you really would have wanted to have seen kind of it to hit the index up in this area up here but it just couldn't make highs above 6900 we saw a bigger reversal which you can see better on the daily chart after the referendum and that's the thing we tanked these couple of weeks alongside other global markets so the fact that it didn't reach the top of that channel and now a subsequently broken the bottom of this channel is not good for uptrend prospects likelihood is we're not about to completely capitulate into a downtrend that's got to be your assumption for now but it does look like we're in sideways market mode which could push up this could be the bottom in sideways markets you can't be so confident about the future direction because it's not just powering up working for dips the trend is up and it's just a matter of where you time it here it's sideways but quite where it ends here for example it ended a bit higher than here here it ended there again but it could have easily ended up here here you might have thought it would end up at the top of the channel actually finished a bit lower so whether this is the bottom or in fact it could come down as low as this spike from October 2013 around the 6300 level the need could even drop right down to 6000 which was the low from June 2013 if you're talking about that as being the high and that being the low it would still really be in sideways market mode even if it went down as far as 6000 so even that that would be fairly worrying for your portfolio stocks and definitely have a few people shaking technically it wouldn't quite be a downtrend yet but if you break below there will be the major cause for concern so given that this channel is broken there's definitely a slowing momentum so that's a possibility where we are right now is a test of this rising channel line I tend to think because of the sideways nature of what we're doing at the moment we probably could push a bit through this rising trend line it's probably not going to get tested too strongly it's probably going to push up but one of these former levels here you can see better on the daily chart we had this as a double top pattern formally notified on the chart forum with a target down around the lows here which it reached because it coincided with the trend line actually smashed right through it so perhaps the base of this former double top pattern could offer some resistance on a bit of a stronger push higher so if we look at the UK we look at Germany let's have a look at what it did just do in addition to the chart forum for the US SPX let's just have a look at US markets so we've had a reversal candlestick pattern here these reversal candlestick patterns have to happen at the end of a trend really what we're looking at here is there has been a strong short term trend but really actually in the longer term it's actually more of a correction than a trend on a short term basis you know you consider that a trend so keep in mind that it's not at the end of a strong hike up like that it's more at the end of a correction but the positive is that it's in the directional longer term trend so we're facing a little bit of resistance that's why they kind of ended here based on this prior low up through there and it's these prior highs from here which correspond to these three highs and eventually collapsed so there again particularly at the moment it corresponds with the 21 day moving average that is that's going to be a tough area so this whole zone could be a difficult one to cross for US markets so the main impetus for the US right now and that's probably going to cross over to international markets is earning season this week is the official kickoff of earning season we've got results from Alcoa on I believe it's Wednesday and a few other big names from the S&P 500 so if they start looking like they're going according to plan then that's going to be a big reason for a next leg higher a new set of multi-year highs all-time highs for these US indices that's how these indices are priced that's how the valuations are judged obviously price relative to earnings so if these earnings come in as they have been in previous quarters then that would be good for the US stocks and probably global stocks but a point of concern that was again the data behind this recent correction of markets was the strength of the dollar it's good for the Eurozone the ECB president Mario Draghi is very pleased about the drop in the Euro the value of the Euro against the US dollar it makes European exports more competitive but obviously on the flip side of that it makes US exports less competitive and so there are a few big multinational companies which have been getting a good amount of their earnings growth from abroad particularly like China and things so if there is a stronger dollar then not only goods and services are going to be less competitive because their goods are going to be relatively more expensive now because of the stronger dollar but also when they actually make those earnings in a foreign currency they're going to get less dollars for each one of those Euros or British pounds or Chinese Yuan have been earned so that's a slight risk but the US economy is not as export orientated as the Eurozone is so it won't be such a point of concern and if maybe it will be a slight boon for domestic companies they may actually end up being beneficiaries of lower costs the stronger dollar means that they're able to purchase their input across a lower relative price and so their costs will be lower and so lower costs same earnings, the entire profits so on balance probably looking for a good earnings season in the US and this price pattern that we're looking at with the S&P is setting us up for that obviously look at the Dow the US 30 so I don't have a 5 minute chart because it makes for viewing the non-farm payrolls a little bit better when you're on the 5 minute chart but to really get a feeling as to where we are see exactly the same pattern on the US 30 and whereas on the S&P it bounced nicely off a previous low here we actually see it bounce perfectly off this 61.8 Fibonacci so it corresponded to this this slow down area over here and if you so when these areas line up obviously it's not going to to these highs here that corresponded to the slow down here then we look at this high these highs, these lows you can see it all kind of lining up that alongside the 61.8 Fibonacci that alongside the fact we're in this channel added some support to that area benefit hindsight that was a good place to get in the market and again we're just kind of testing this 21 day moving average and we do seem to have broken the short term down trend if you were to draw a line through there it's not that reliable I suppose that does go through sort of three highs so we're through that so we can maybe expect a drop down no particular US data this we really accept the FOMC on Wednesday which obviously is big but today and tomorrow not too many important earnings but tomorrow Tuesday, Wednesday, Thursday tends to be the big days for earnings in the US Monday people don't like to release results there's been something scary over the over the weekend and Friday is the end of the week we want to go early so I've covered some FX there covered some of the indices let's have a look at commodities same story really when it comes to commodities just a big part of the reason for their decline is the strength of the US dollar to look at gold straight away that came within inches today of multi-year lows so this is the daily chart and you can see this is the low that we put in in June 2013 which remember when you're doing this kind of intermarket analysis was also the low of multiple stock indices as well so gold theoretically a safe haven but when there's a big sell-off does tend to get sold off as well and we've seen a slowdown in stock markets recently but we've also seen gold come off so gold is not always a perfect hedge to stock markets but on the the longer term picture here you can see this is kind of big if we get through here we're literally at the lowest since 2010 through there we're we're threatening a thousand dollars a thousand dollars an ounce if we break through here and if you consider this a I've got one of these in the pound as well which is more better form if I just show you how to use one of these Fibonacci extension tools is the best way on our platform I think to what's to get the potential objective from a pattern what we'll be looking at here if this were a a bear pennant or a bear flag and we'd potentially looking at $575 dollars an ounce in gold which obviously somewhat goes against consensus right now that's just something to bear in mind doesn't have to be your default assumption sell here and take me off it here but in terms of the longer term picture that's the possibility the next level is 1180 silver is an indication that that could be on the cards because silver's already broken down to four year plus lows so if you consider this is this is a pretty long term chart here so given that we've broken through these this is the equivalent lows in silver given that we've already broken through we have to consider where the next level is at so we're going up against these lows for May but now we're looking at the resistance and support pivot area from going back as far as 2006 that's around $1480 dollars an ounce in silver that could be our next stop look at this long term picture okay the other big one is oil obviously and that takes us nicely towards the end of the session here I haven't seen any questions coming through the chat hopefully there because I'm covering everything hopefully it's not because you've typed it in a different area and I just don't see it's a chat window that I need to see the messages on just looking at crude here this is just an interesting example again doing that similar technique where say we're talking about this as a triangle pattern this is the bottom of it the trend line from the pattern talking about that as the height of the pattern then you can see that if you take this as the breakout area the idea is that that's the height of the pattern so you'd extend the height down below the breakout area so that would target about $84 dollars an ounce sorry dollars per barrel in Brent and you can see it's interesting that these lows which I had marked out as a potential support area is some of the works are better than others but they actually work perfectly with these Fibonacci extensions we've obviously blown straight through the 61.8 which could indicate that this low is up next and then possibly even that 100 full pattern objective as you can see across all these charts we're looking pretty overextended with the US dollar we're touching $90 an ounce in W2I $110 in Dolly Yen $160 in the British Pounds $125 in the Euro so there's big round numbers being hit after a big rally in the dollar so it's risky to go against the trend but you've got to start assessing what the chances are of a reversal let's just show that W2I as we come into the end of it here so here W2I we've got a big long term line here that I'm sure a lot of people have on their charts and we broke through that big time last week so we might be looking at a little touch up to the lows around 91-ish and then we'll have to see what the market does from there but this is broken through but we did see a bit of a pullback and these things aren't exact so that could end up being the cause for a bounce up again towards 100 again like I said because we have just we have covered that $90 but I was a big round number should that trendline hold and move low again does rather look like 85 would be on the cards so W2I fundamentally for oil global supplies both in the US with W2I and from the likes of OPEC affecting Brent W2I's, there's lots of production but demand is potentially softening a bit slow down growth in Germany and Europe slow down growth in China particularly and some you know the US economy is going the best but still it's not absolutely booming so slight weakening in demand higher supply is of course higher prices something to watch out for perhaps and I mentioned this in a video snapshot that I did recently I think it was the last one on oil maybe just an OPEC intervention by cutting supplies would be something to push oil prices up but aside from that it's hard to see what keep them higher for now okay I think we're going to call that a wrap thank you very much for attending hope that was useful if you send a message and I didn't see it, apologies but looks like we're good to go good luck for trading this week that is Jasper Lawler signing off from CMC Markets thanks again