 Hello and welcome to CMC Markets on Tuesday the 26th of May and the weekly market update. Now last week I talked about the potential for the DAX to move back to 12,000 in the context of a break of a downward channel that we've been in since we posted the all-time highs around about 12,400 and I was a little bit nervous about the break hire in the DAX simply because of the lack of confirmation of the break that we saw on the Euro stocks 50 simply because I think sometimes when you're looking for potential breaks out of trend reversals sometimes it's nice to have a confirmation in a way that DAO theory argues in the context of moves higher or moves lower. Sometimes markets correlate quite well and the Euro stocks 50 does tend to correlate fairly well with the German DAX. So I was right to be cautious about this break hire in the DAX because if we look at the four-hour chart of the Euro stocks 50 that I showed you last week we can see that the price action has respected the upper trend line from the highs in April and has rebounded back off it. So for the time being the downtrend in the Euro stocks 50 remains intact and as such I think any rebounds in the German DAX are likely to find resistance around about 11,900 the 12,000 area. So certainly going forward in the context of what we're seeing certainly in some of the data that we've got coming out of the Euro area the Euro weakness and the fact that the Euro stocks 50 and the DAX is finding it difficult to rally despite this Euro weakness it makes me a little bit concerned that maybe we could see further downside in European equity markets and maybe we're getting a false break lower in the Euro dollar and could actually be poised to actually rebound higher after last week's steep sell-off in the Euro. So in the context of the downside on the Euro stocks 50 I think the 3,500 level is a very key level it's double support from the lows that we've seen in May and as such it's likely to be a key support level on any move or test towards the lows of the last 30 days. Now I talked about the decline in the Euro in the context of the weakness that we've seen over the past few days in European equity markets and the fact that really what should be happening is that while the Euro is going down European markets should be going up. Now if we look at a weekly chart on the Euro dollar and we can see that we've had a very strong down move last week but we have to put this down move in the context of the very bullish monthly candle that I talked about at the beginning of this month. It's also noticeable I think that we had a similar very strong down move around about the end of March and the beginning of April after we put in a very strong low at 104.65 so even though we've put in two potentially very bearish candles since we put in those lows the overall monthly engulfing candle bullish engulfing candle that we saw in April still holds sway and as such I'm going to be very I'm a little bit nervous about this very strong down move in the Euro dollar which brings me to my next chart. Now what would cause me to revise my outlook with respect to a move higher in Euro dollar? We've seen a strong move down we've seen a strong move below one ten and a half that's a move that I didn't expect to see so in that context we need to find out where the next support level is. Well then I think the next key support level is at 108.7580 why is that important? Well we can show that on this four-hour chart here and what I've done is I've taken the lows that we saw earlier this year and projected Fibonacci retracements off the peaks we saw a couple of weeks ago just below 115 and at 61.8 Fibonacci retracement level of that entire up move comes in at 108.7580 so if we break below 108.7580 then it stands to reason that our scenario for a higher Euro back towards 110.50 which is our next now resistance point it was support it's now resistance and a move back to 115 remains seriously in doubt. A move below 108.7580 rip up the bullish scenario and you have to adopt a wait and see attitude with respect to the Euro's next move. What would the next support level be on a break below 108.7580? Well I think you've really got to look at the lows during the week of the 20th of April and you're looking at around about just below 107 around about 106.50. So not only have we seen a weaker Euro we've also seen a stronger dollar now you can talk about the reasons for why the Euro's weekend and we can also look at the reasons why the dollars strengthened you can talk about prospects for US rate rise Janet Yellen's comments on Friday that she expected to see a rate rise sometime this year if the economy improves and those were the key those were the three key words that I think the markets are ignoring if the economy improves actually that's four words but who am I to count anyway in that context what we've seen is the dollar's gone on a surge it's posted its first positive week in the last six weeks against the basket of currencies and what it's also doing is it keeping a cap on Brent crude prices so that brings me back to the Brent crude price chart that I've shown you in previous videos I think it was about two or three weeks ago I showed you this this particular chart the Greystone Dogey is still there it's found resistance at the 2010 lows around about $67.80 it's finding support around about $63.40 we're getting lower highs that would appear to suggest that Brent crude is running out of steam that will be confirmed on a break below our support line at $63.40 that concludes this week's weekly market update once again thank you very much for listening this is Michael Houston talking to you from CMC markets