 Good afternoon from London everybody, Jasper Luller, market analyst at CMC talking here. Getting going with our weekly charting analysis. Final page of the risk warning for those Canadian and Singapore clients who are... I was just looking at the Dolly Yen here, mentioned it in the chat box just now. This pattern here, just going purely into sort of the charting element of things. That is pretty much a tweezer top. This candle is slightly higher than the high on this candle. The one on Friday is slightly higher than the one on Thursday. But they're pretty much equal. And then it's also a bearish and golfing candlestick, just about. When you talk about candlestick patterns, Japanese candlesticks, you tend to ignore the highs and lows really more about the body. And the 24-hour market, the opening and closing levels from one day to the next always tend to be about the same. So the close of this market ended up being the same as the open from this. So it didn't engulf on the top side, but then it really never does in the 24-hour currency market except on a Sunday when the market reopens after the weekend's closed. But the important one is just down here. You can see that the close on Friday was below the open on Thursday. And that's basically the engulfing pattern right there. And it is following through a bit today. You see we've sort of gapped lower on Sunday, on today. And there's potential for this pattern to see us moving down towards this consolidation area around 1340. But typically when you see a, if you just look here, for example, back in the first of October, you see a sort of bearish pattern take place. But really the trend is still up. So bearing some cataclysmic event, normally you'll get a first few hints of the trends wearing out. So this would be a hint that this trend is sort of sowing a bit of signs of exhaustion, which obviously it should be after the extent of the rise that we've seen. So what you could get is more like a sort of double top pattern happening on the daily chart where maybe it will dip down a bit. Maybe even it's done its worst here and moves up higher again only to fail. Or of course the whole pattern just could be blown out of the water and it could move to new highs. You know, nothing's perfect. It could just go up to 116 and drop again from there. So it's the first sign of exhaustion. It's not saying it's the absolute top. It moves a bit higher, but it hasn't got the momentum to get much past there and then rolls over and breaks a trend line. So you've got to put all these factors together. Don't just trade off one signal. But a little indication there there's some dollar weakness coming into the market. And you can see that reflected in, well gold's not looking so hot, but crude oil prices are up today. And you see the euro and the pound bouncing a little bit. The charts themselves look a bit more impressive just because a lot of the rebound higher kind of happened on Friday alongside that move in in dollar yen. So again the trend is kind of down so this may not last too long, but a bit of a sign of a kickback in the US dollar. And I think that probably relates a lot to the non-farm payrolls report on Friday, which was okay. It was above 200,000. Some of the internals weren't that impressive as normal. And it did miss expectations obviously. So not as good as it could have been. It started off in the currency fund, but only because not too much is happening in the equities today. We may as well start off with the US markets. They tend to be what lead things. It's a pretty crazy looking chart we've got in our hands right now. This is what you'd really call a kind of V bottom or V reversal. Because obviously that is just an extreme drop, followed by an extreme rise. You don't see these too often to some extent happened here. You get these kind of smaller versions of it, but nothing really drops off 10% and then comes right back again only to brush through the highs. So it can be a difficult trading environment because maybe you sort of see the reversal coming down here. You see a few levels broken up. You buy into the highs. But then there's just not really been a pullback. So once you see the high, maybe a few people were looking for a drop back down to the consolidation areas down here. But it's just kept going. So it's one of those cases where A, you've got to be aware of the direction of the trend, but B, you've got to be aware of the volatility in the markets. And when there's the kind of extreme one-way direction in the markets, if you're looking for, you know, markets are only correcting 0.25% at a time and you're looking for a 3% correction, it's just out of context. You know, you've got to kind of adjust. If you want to get involved in this trend, you've got to kind of, you know, push your, you know, get a bit more aggressive with the entries, but obviously be aware that there is the risk that a larger correction will kick back and just have your stop losses in there accordingly. That can be difficult to adjust how big you expect the correction to be, but you've got to judge it on what's been happening recently. And, you know, there's barely been any more than a, you know, it's just a one-day correction there. It didn't even close lower there, one-day correction there, one-day correction there, and then eventually dropped but closed higher there. So it's been a very aggressive trend. I mean, the U.S., the U.S. corporate earnings have been fairly decent. I think the last statistic I saw was is about 60, 65% of the companies had beat on the earnings front, but it's only more like 50% on the revenues. So, you know, the companies are getting more efficient, if you like. Maybe a few layoffs, cutting costs. And so the margins are good, but, you know, just the revenue is slightly where it's lacking. And, obviously, in a kind of growing economy, the revenue should be picking up with the profits. So there's definitely a lot of questions to be asked about the state of the U.S. economy is doing well, but the consumer does not really seem to be participating. Retail sales have been a bit lackluster. We're going to see those again later in the month, later in the week, sorry, on Friday, its U.S. retail sales report. And that's kind of a big one, I think, because, really, they have, even though there's been record consumer confidence, consumers have not actually been putting that through into going out and buying things. And so that is obviously a bit of a worry, particularly for the retail stocks, going into the Christmas period, when that's when they get a lot of the annual earnings, just in that one final quarter. The other thing, I think, to bear in mind of this, is going to cover both U.S. stocks, U.K. stocks. The Germany 30, the U.S. dollar is more like a broad theme. Obviously, you can trade it more directly through the China A50 or the Hong Kong 43, but I think the Chinese data this week is going to be one to keep an eye on. We've had the CPI out today. That was slightly under expectations. Trade data was at the weekend. That was slightly above. The trade surplus improved, but it wasn't so hot on the imports front, which shows a bit of a sort of lack of domestic demand, which is where China trying to orientate themselves. But in the rest of the week, on Thursday will be a big one for China, Chinese data, industrial production and retail sales, and foreign direct investment released on Friday. So that's a sort of backdrop. The reason we saw this big plummet in the U.S. dirty and the other world indices was the sort of fears over global growth. It was a bit more orientated towards Germany and Europe, but very much in the background is China and the slight slow down there. Although that has been tepid recently by sort of bouts of stimulus from the People's Bank of China. They've even done a little mine, a bit of QE, just pumping money straight into the banks for to be used as loans into the broader economy. So that's kind of the private survey data and the official statistics have improved a bit recently from China and you could probably largely attribute that to the stimulus that the economy has received. So another big thing will be, just like last week with the ECB, government and central bank stimulus, the same thing in China, we've got to constantly watch out for what the People's Bank of China and the Chinese government are doing to prop up their economy. Both the stocks, who like more stimulus and if you are trading perhaps copper, that's a big one, it's a kind of direct way of trading this kind of Chinese data. And copper's been holding around this 300 level, $3 per pound for quite a while. I'll just bring that up just as a buy-to-buy. This is the one week chart. So you can see what we're kind of dealing with here. It's been a big sharp drop off and then we're kind of in what you essentially call a triangle pattern. So it certainly could break up through the hypotenuse here, the diagonal line, but the default assumption probably would be towards a break at the base. I did a YouTube video on this a little while back. It's a kind of longer term situation, but if we move substantially down 3,300, even down to 290 I think we're at risk. We've got some support a little bit down below there, but really you can see this has been the line in the sand. This is probably going to be largely triggered by events in China. There's a lack of relief in further stimulus or just the data just dropping off despite the stimulus that's been done. Just flipping back to the U.S. there to you. Because of the extent of the steepness of this decline, it makes sense to kind of dig into the details a bit. We're above all the moving averages. There really is an uptrend. So selling is a distinct risk unless you've got deeper pockets and a sort of longer term position in mind. I mean it's got to correct a bit at some point, but you're really going against the flow if you do. You've seen that really the momentum has slowed a bit. We saw these kind of large moves off the MA going on here, but now we've touched the MA and sort of just started drifting into it again. We are trending higher, but there's definitely a bit of a slowdown happening and you can see that in terms of how the markets reacted to the prior highs. If you look here, there's the high. It's barely got down to it, you know, break through this level. We haven't seen that again yet. Big acceleration off there. I think that was when the Bank of Japan announced their stimulus measures. Yep, that looks about right. So big move off there. Haven't got back down to that level since, but making these highs with pretty sideways towards the end of last week. Very sideways. Tested the level again, broke through. There's that high. Tested the level again almost straight away. And that's what we're dealing with at the moment. So, you know, with the benefit of hindsight, you've done a very kind of short-term trade would have been, you know, these are the highs, broke through, retest, up to the highs again. But we are kind of already at the highs again now. So if it comes down again, it's not going to be as strong a signal as it when it happened the first time. But what we could get through is a middle of a move higher. And if you expect this kind of low volatility uptrend to continue, it'd be a breakthrough and then a retest to the high again, you know, if this same pattern is going to continue. But this 21-period moving average on the four-hour chart has been working pretty well in terms of holding up this trend. So that's something to bear in mind if that breaks. Again, one indicator by itself is not enough to trigger a trade per se, but if you factor a few different things in, maybe you draw yourself a trend line, a reversal candlestick on the daily chart perhaps, maybe even a chart pattern on the daily chart, then you can start putting it all together in terms of this uptrend maybe about to roll over. Certainly pretty overstretched at the moment and it looks like it's slowing down, but that's not to say that we kind of have some solid earnings, which we're still in earnings season coming out and triggering us up to new levels. You've got to assume the trend is your friend until it ends. Now, different picture in the UK and Europe really. Rather than being right past the highs, you can see that this is the UK 100 and this range that we've been in for quite some time. And this big move down went and tested the bottom of the range, so it's okay, we are strictly speaking in sideways mode. We're not in a complete collapse, but certainly this was a warning sign because you could have said that previously we're in something more like a sort of rising trend. We broke right through that, but now we're back down in this more sort of sideways channel again. So the risk that we face at the moment is you see there's this low here, which I did have a line at the low here. We've moved through that a bit, so I've removed it. But that still kind of is in play, this kind of dip level here. You can see the closing prices fit in quite well with the 61.8% retracement of this drop. You can see it a bit more clearly on the 4-hour chart. This is the move. Kind of a reversal pattern here. Something along the lines of the reverse head and shoulders. Not the strongest pattern, but there's the left, the inverse head and shoulders, the left head of the head and the right shoulder. You know, moved up through, tested. But we're struggling at the 61.8% level, which as I mentioned kind of corresponds with this consolidation area on the 4-hour chart, and that low we're referencing over here on the daily chart. So again, the trend is up. We're only up to the 61.8% retracement of the drop in the UK, whereas compare that with the US where they're up at new highs. So distinctly weaker performance in the UK. And that probably just all centers back around. The reason for the big drop in the first place in the US, they were sort of following Europe lower really. Although all the markets are globally correlated and there was concerns in the US that these, you know, the poor growth in Germany, except it might translate to earnings, it hasn't happened so much. So they've gone on to new highs, but in Europe the problems still persist. Obviously there's a lot of trade with Europe. And the Bank of England, which issued their inflation report this week on Wednesday, you know, they've already been saying that there is a risk to the UK recovery because of Europe. So that's why the FTSE is not really, you know, it's uptrending and we can certainly break through the 61.8%. Again, assume that the trend is going to work. We're definitely at risk factors here. I'm kind of buying this high. We've been back and sort of vaguely tested it. If we test it, but don't get through the high again, then drop below it. Then we've got this trend line of support below. But sort of this would be the major line in the sand. This is the first sign, this line, and then this line here, right at that 6500 level if we get below there. Doesn't mean you would trigger a trade right at that because we'd probably be due to bounce. But, you know, once you get through there, you've got to start thinking the market looks a bit weaker. Then maybe you look for better price levels to go the other way in the market. And that's not really fighting the trend because, again, if you look at this daily chart, we've seen a higher high there and we've seen a higher low. But below this 6444, that's the official kind of low that you'd be looking at below there. That would be a break low on the downtrend. And we're still below the 200-day SMA, so the kind of longer-term perspective. We're still in that kind of downtrend-type territory. So it's not an altogether bad idea shorting the market under the 200-day. Whereas if you're above it, perhaps you'd be a bit more hesitant to do so because this is a sort of mark with a longer-term trend of things. Similar picture in Germany, as I was about to say. Here, what we alluded to, and you may have seen in the chart forum, is a sort of head and shoulders pattern of a longer-term picture. We broke through it. Had the pattern really held together, we would have kind of fallen low from there. A lot of people were looking at this pattern and sometimes when it's this obvious, it doesn't work. So that's kind of what's happened in this case. We were back at both a combination of the 21-week and 50-week SMAs, and we saw a sort of doji-looking candlestick last week where we did push higher, but we just couldn't sustain the gains. It puts the end of the week a bit higher, but the German DAX, as we traded it, the Germany 30 ended up closing lower. So potential risk of this would be at the end of it, sign of exhaustion there. It's handled by itself, but you put it together with the MAs. I had taken the Fibonacci off because I think I just wasn't finding it that useful. I think we went through the 61.8, if I remember, from this decline at least. We have been through the 61.8 from there, but from the very top, we're in that vicinity, that kind of two-thirds retracement vicinity, similar to the 50. So there's this... If you're wondering what that line is, it makes a bit more sense from the daily. It's basically this area here where we saw a slight bounce, then the price dropped through, retested again, and then we found it, and that's where we are there. So we've come off pretty hard from there on the daily chart. On Friday, we're bouncing back a bit today, but again, if a failure through these kind of levels, we've kind of made a new low on the four-hour chart. You know, that's a low. We've kind of got through there. Again, if we roll down over through this 50MA, maybe a trend line you want to draw through there, then this rally may peter out. Let's have a look at oil now. This is something I referenced in the insights today. This is on the shorter-term picture. To make a bit more sense of why you might believe this breakout would be happening, if we just flip over to the weekly chart, you can see this was the low made in June, I believe it's June 2012. We're sort of bouncing off there on a weekly basis. Last week, it still closed distinctly down, but we did kind of come off the lows towards the end, and it does correspond with this low here, and then the very bottom from September 2011 was 75, and that's been a level a lot of people are referencing in terms of how much Saudi Arabia would tolerate in terms of price declines before they did a price cut. Also, the profitability of U.S. production for oil, below 75, I think they'd have to close down a bit of the production over there. A lot of people aren't talking about that round number, and we do have this technical figure. There's a reason to believe there could be a bounce from here. In the short-term, at least, we've got this triangle pattern which has broken out, retested, and now we're up at the highs again, or just above the highs. Coming up into these lows here, right around that 80 mark, which is a big one for WTI. We're up through 80 again. Then we could be looking back at moving back towards 84, and if we can get through 84, then the trend really has kind of turned around. Gold is always an interesting barometer. What happened? This really did benefit from the weak NFT on Friday. We saw some sharp drops. Let's get a bit more perspective on this. This is the bigger-term picture. Then I did a snapshot video on just how weak this could get. If you take this sort of pendant type pattern, sometimes the bottom of the pendant will be sloping upwards. Typically, you could use that. I've just drawn a base, a flat base of 1,180. A drop down to there. If you use that projection down to the base, and then from the breakout area, we'll put us about $575 per ounce in gold. That's a bit of an extreme price projection, obviously, but just to give you an aware of the possibilities and the significance of this 1180 break. What we're dealing with at the moment is a retest of this breakout area. You see the prices surged up on Friday, perhaps lolling people into a bit of false sense of security. We're just coming off a bit unsurprisingly around this 1180-tub area, which is the base of this pattern. Not to say we can't push through it. A lot of people are going to have their eyes on this. Certainly a chance of pushing up further into the range again, but to me it's looking pretty weak given that closed below the 1180. It's held up for so long. Not a lot of the US data this week to really trigger the moves in gold. It perhaps just retails sales towards the end of the week. It may follow the direction of crude, which may be largely affected by the crude stocks report on Wednesday. The currencies we talked a bit about at the front at the start. I did, I think, bring up this chart for the pound. Let's just show where we are here. It doesn't look entirely dissimilar to oil. The reason for that is these moves are largely dollar-related. That's the bigger picture. We're down through this 50% mark and approaching the 61-8% retracement of this big rally that we saw since 2013. Now there's been a lot of divergence happening here. Each one of these lows has been accompanied by higher RSI. It's not quite translated into a reversal yet. We had the potential for that to happen here. It didn't quite happen. We've moved and made new lows. So the trend is still very much down but against declining momentum. So we've dropped through here, but we're seeing a bit of a bounce back. Let's think about where perhaps the market could turn around. You could see its approach. This would be a discount spike level. That's what we're dealing with at the moment. Perhaps this consolidation is where we broke through here. And then right at the 160, that's the psychological number that everyone's paying attention to. So we could get up as far as there again or maybe just below it before rolling over again. Euro is right up and testing 125 handle at the moment. It's broken through a few levels that you might have expected to see some declines from. So that was the first one. It bounced off there, came down a bit, but next candle was able to get through it. Able to get through the 21 day, 21 period on the before hour chart. And now having broken through these kind of closing type levels, right back at 125 again. Trend is still down, but yeah, it's shown a bit of strength in the face of the downtrend. Still very much according to RSI into this kind of bearish stone, though, below the 50 and even below the 40. So we're testing the 40 again now. That may correspond with a move up here. We've got the 21 day may correspond with the 50 on the RSI. So I think we've sort of covered most of the market here. If you guys have any other markets you want me to cover, let me know. But I think generally there's been sort of, we had the U.S. midterm elections last week. A lot of people throwing around the idea that the six months following the U.S. midterm elections, particularly the midterms associated with the last term of the U.S. president, you know, the second of his two terms in office, tend to be the strongest six months statistically out of the four year presidential cycle. But we obviously had had a pretty rapid return in stock markets of late. So this year could end up being an exception. But based on that past seasonal data, you know, it's theoretically a strong six months that we're about to see in the next two quarters. But, you know, the timing of that could be interesting because the general consensus is that the first rate hike for the U.S. would happen mid-2015. So if you go, you know, if you put those two together, the six months following these elections and the time you prefer to rate hike, maybe there would be some distinct risks to markets, especially if we saw some rising going into that, you know, that having had pretty decent earnings, having kind of seemingly got past the weak growth in U.S. stocks at least could maybe just keep rising until that kind of seasonal barrier and the first rate hike really become a prominent issue. As I said, we've seen some steep rises, but the trend is still up, so it's just another fact to keep in mind. Okay, well, yep, not seen any further questions here. Should I do that? I'll cover that after the official recording here. But otherwise, I hope that was useful. Good luck for trading this week. This is Jasper Lawler signing off for this week's webinar.