 Hello and welcome to CMC Markets on Tuesday the 17th of May and the weekly market update. Now over the past few weeks I think it's been particularly difficult to deduce a long term overview or even a medium term overview of where equity markets are going to be going to next since pretty much the beginning of March we've been trading sideways but there are a number of patterns that do appear to be shaping up to be fairly interesting and I think it's important that we have a look at these patterns in particular because they're happening on two of the major indices that we look at on a very regular basis namely the FTSE 100, UK 100 and the US S&P 500. So let's make a start with the UK 100, the FTSE 100, got the chart in front of me here and we can see from the horizontal lines that I've drawn in on this particular chart here that there's certainly potential for a little bit of a head and shoulders reversal. Now a couple of weeks ago we talked about golden crosses on the S&P and the FTSE 100 and typically they do tend to be bullish signals they tend to be precursors of a significant move higher hence the name Golden Cross but at the moment you really do have to look at the way the FTSE has been trading over the course of the last few months and certainly since March we have been apart from a brief spike above 6400 in April we've been trading pretty much sideways and the key level I think for me on the top side is just above 6200 it's around about 6220, 6230 that for me I think is a very very key level it certainly it represents what I would call the left shoulder and potentially the right shoulder now shoulders don't necessarily have to be equal they can be slightly unequal but certainly the left shoulder currently sits around about 6220, 6230 you've got the head at 6400 and then you've got the right shoulder which is continuing to develop shall we say with the top of that around about 6220 so that gives us pretty much a horizontal neckline horizontal neckline currently comes in around about the 6050, 6050, 6060 level so I think at the moment we're trading sideways in a broad range between 6050 and 6240 on the wide of it ultimately what we want to see there is a break of that range to determine where we go to next I think what's particularly interesting about this chart is the fact that it pretty much mimics what we're seeing in the S&P 500 and that's certainly borne out by this chart here we can we can expand it and we can see that around about the 2030 level there's a very there is a very nice support line coming in around about the lows that we saw in the wake of that April payrolls data that we saw at the beginning of this month on the top side of that you've got the right shoulder which is roughly around the 2075 the 2080 area and obviously you've got the head just above 2100 again we had the Golden Cross in April which I talked about in an earlier video and warned about reading too much into it and the 50-day moving average does appear to be losing momentum it looks as if it's starting it's still rising but it's rising at a much slower rate we've also got the declining highs from the peaks in April currently coming in around about just above where we are now around about 2075 so again that's quite quite a key resistance level to keep an eye on in the context of this overall formation of the right shoulder so looking on the top side around 2075 2080 on a resistance basis on the downside you're looking around the 2030 2035 area currently in the middle of that at the moment moving on we looked at this last week I'm making apologies for looking at it again this week potentially we've developed a little bit further on the right shoulder basis for euro sterling and we do appear now to be approaching that neckline that I drew in from the March lows so at the moment we're still very much capped at the 7930 area also corresponds with the 200-week moving average which again I think is a very key resistance level but more importantly I think in the context of this chart here in the left shoulder here the head and the right shoulder here the oscillator is now starting to turn down as well and we are starting to get a little bit of positive momentum in terms of the pound negative momentum in terms of the euro that that pretty much brings me into what we were talking about yesterday with respect to crude oil we did get a golden cross on that we do appear to be sustain sustaining the positive momentum on there but we do appear to be running into a little bit of a resistance around the $50 a barrel level why are we running into resistance there well I think it's pretty much on the basis that round numbers tend to act as significant areas of support or resistance so it's a psychological thing more than anything else you get it in terms of retracement 50% $50 a hundred dollars a hundred dollars a hundred dollars 110 150 120 markets like round numbers so I think as you approach that $50 level it's going to be find it very very difficult to crack through it that's not to say that it can't or won't be able to break through it but I think it's important to understand that you might find a little bit of selling pressure coming in and around that level that's not to say that we can't go higher we certainly got potential to do that we're still trending higher we're finding support progressively higher levels but at some point we could well see a little bit of a little bit of a pullback I think a lot of it may depend on the overall headlines with respect to the strength of the dollar ultimately I don't expect the dollar to strengthen too much irrespective of some of the rhetoric coming out of the Federal Reserve but it's something that I think it's important that we all keep an eye out for in that context that's it for this week once again thanks very much for listening this is Michael Houston talking to you from CMC markets