 Hello and welcome to CMC Markets on Tuesday the 21st of April and the weekly market update. Now last week I had a quick look at the FTSE 100 and I'm going to revisit that this week in light of the declines that we saw pretty much across all of Europe and European markets. In fact we posted the worst weekly decline this year for the German DAX and the Euro stocks 50. And I think the key question with respect to that particular decline is whether or not it's a precursor to a correction. I'm going to look at the key support levels on the German DAX, the Euro stocks 50 and also the FTSE 100. We did in fact get that decline below 7000. We held support of 6980. What we now need to see across all of the markets in Europe, FTSE 100 included, is for the previous highs to get taken out for the current uptrend to remain intact. Now when I look at these particular charts and I will look at each one in question and I'll look at the daily chart and I'll look at the weekly chart, I think we are at risk of a potential correction, but that correction will only take place if we break below the key support level. So I'll have a look at them. I'll also have a look at the pound against the dollar. We've heard an awful lot of chatter over the past few days about how weak the pound is. In fact it's not weak. It's weak against the US dollar, but pretty much across the board it's holding up quite well. In fact on its trade weighted index it's 12% above the lows that we saw in 2012. So I'm going to start off with the UK 100. Now this is the same chart that I showed you last week, it's the daily candlestick chart and once again we can see how we retested that 6980 level on Friday. We've rebounded off it. That remains the key line in the sand going forward for any further advances. Now obviously we put in the all-time high just above the 7100 level that remains a key level and at the moment we do appear to be struggling to get back above that because I think when you actually look at European markets in the round I think the last week's declines in the DAX and the Euro 50 could actually weigh on the FTSE 100 going forward and I think that's the key concern that I have going forward in the days and weeks ahead. So why am I concerned about a potential correction? Well quite simply speaking let's look at the weekly candlestick charts. Last week we posted the biggest weekly decline in the DAX and in the Euro stocks 50 this year. Look at the weekly candle chart for the DAX right now and you can see exactly what I mean. We've got a tweezer top on the top side which is going to be quite a key resistance level just above 12,200. We've got also key support around about 11,600. Now the extent of that decline on that weekly candle is taking out not only the previous weeks low but the two weeks before that as well which does seem to suggest that there is a little bit of nervousness about being long of German equities at these current heady levels. If we then take that out, roll that out and put it into a daily candlestick chart which I'm going to put in front of you right now we can see once again how that's borne out but what's more important as well is that the 50 day moving average along with that key support through the end of March lows is going to be very, very critical in terms of the next move in the DAX. If we move below 11,600 then the prospect of a 600 point down move starts to increase. Let's now move that across to the Euro stocks 50. Again it's a similar sort of story again this is the weekly candlestick chart and once again we can see a very negative candle. It's not as negative as the one on the German DAX but nonetheless it does paint a little bit of concern that maybe we could be on the cusp of a correction. Key support level is around about 3600. So again once again keep an eye on that and the fact is that despite the early rebound that we've seen at the beginning of this week we still remain quite away short of the losses that we posted last week. Now last week I warned about the risks of being overly short of the pound simply because we're at the lower end of the range that we've been in over the past five years. The May 2010 lows were around about 142. We posted a low of 145.60 last week and if we look at this weekly candle chart there is some evidence that maybe we could be near a short term base. Why do I say that? It's once again my trusty candlestick charts. We posted a lower low last week, we posted a higher high which suggests that we've got a key reversal day. More importantly than that is a bullish engulfing candle on the weekly which does seem to suggest that after the declines that we've seen over the past few months that maybe we could be near a short term base. What would confirm that? Well what would confirm that is a break below one, break below, break above rather the peaks that we saw last week. Now the peaks last week were around about 150.50. We need to consolidate a move above 150. The problem with that is obviously trying to get in on any dips and unfortunately for that there's quite a big gap between 145.60 and 150.50 which is basically the entire range for last week. So interim support on the pound against the dollar we can drop back as low as potentially 147. The only thing that would negate a potential squeeze through 150 towards 152 is a drop below the lows that we saw last week. There are early warning signs on the pound against the dollar that maybe the bottom is in and we could actually be at risk of a short squeeze higher despite all the stories in the media about the risks to sterling from a deadlocked parliamentary vote in two or three weeks time. So it's very important to look at the price charts and not just listen to the noise around the election and this chart is telling me to be very very careful about being overly short the pound against the dollar. So that's pretty much it for this week once again thanks very much for your company apologize for the audio problems on the video last week hopefully we've managed to iron them out this week otherwise until next week this is Michael Houston talking to you from CMC Markets.