 Hello and welcome to CMC Markets and this week's version of the weekly market update on Tuesday the 8th of July and once again we're talking about record levels on US stock markets, certainly the catalyst for those levels. It was a very good jobs report last week from the US, in fact it was actually two very positive jobs reports, one from ADP and obviously the non-farm payrolls data on Thursday. And certainly the bounce back in jobs growth I think has raised optimism that the US economy is slowly coming out of the deep freeze of Q1. I think the key question now I think vexing an awful lot of investors is given that markets are at record highs or looking towards potentially the 2,000 level on the S&P 500 is are these levels sustainable? Certainly with the onset of earning season this week starting with Alcoa on Tuesday night and I think that's really the big question. I think the dynamic remains about the quality of the earnings as we head into the second half of the year but also what role the Fed has in the context of monetary policy over the next 12 months because I think the improvement in the unemployment data does suggest that Janet Yellen is going to find it much more difficult to anchor interest rate expectations at their current low levels and I think that's really the prism that you need to look at the markets through over the course of the next few months. The Fed is looking to scale back its asset purchase program. Are earnings expectations going to continue to increase in line with market expectations against a backdrop of a retreating Fed and the prospect that later this month the IMF could further downgrade its growth forecasts? So that's pretty much all I've got to say about equity markets. I still think we're in danger of a correction. Unfortunately I think we could find the timing of it rather problematic. So this week I'm going to look at the pound against the dollar in the context of the fact that we are at six year highs as well as the fact that the UK economy does appear to be improving. We saw very positive PMIs last week however the issue or the outlook has been clouded somewhat by this morning's rather disappointing May industrial production and manufacturing production figures which showed a sharp fall in complete contrast to the PMIs. Let's look past the data and actually look at the price action and I think those of you who've been following my videos on a fairly regular basis know that I look at candlestick patterns quite a lot. So for this particular segment I'm going to look at a potential reversal pattern on the pound against the dollar and then look at some of the charts that could well dictate the next move up or down. So let's start with the daily candlestick chart. Now the chart that you've got in front of you right now shows a circled piece of price action with narrative hanging man. Now the hanging man is can be identified by the formation chart that I put in front of you or the formation graphic that I put in front of you. Now hanging man or hanging man are normally found at market tops. The market has to be in a clearly defined uptrend. The market has to start to show significant signs of weakness and aggressively test the downside. Well we can see that quite clearly in the candle that we saw at the end of last week. The session still closes higher than the recorded low but then we get a close below the support in the next three periods for a potential confirmation of this reversal. We've certainly seen that and this can be borne out by the break of the trend line on this four hour chart that occurred in the last couple of trading sessions. What we also need to see now that we've broken below the lows that we saw from last week is a move below 170.40 on the downside towards 169.10. Now on the four hour chart there is potential for a little bit of a correction higher and I think that is the key concern going forward. You could get a short squeeze all the way back to 171.50, 171.60. You would only rip up the rulebook or rip up the trade with respect to a potential down move if we move above the previous highs at 171.80 and that's the key thing. If we move beyond 171.80 then what we've seen over the past few days is a false signal and we could well be set for a test of 173. As long as we stay below 171.80 then the risk or the bias remains towards the downside and I think that's the key narrative that needs to be taken away from this particular setup. Let's have a look now at Euro dollar. Now we didn't really get any surprises last week from Mario Draghi and to be quite honest, it's unlikely that we're going to get any surprises much before September or October. Now we have seen a decline off the highs around about 137 but we still remain very well supported around 135 and for all the rhetoric that we're hearing from businesses about the crazy valuation of the Euro, I think it's unlikely that we're going to see a significant move one way or the other until such times as we get a significant improvement in US economic data or a marked deterioration in German economic data. Otherwise 135 remains the key support on the downside and 137 remains key resistance on the top side. Let's finish up with dollar CAD because dollar CAD's got a very interesting support line which comes in from the 2012 Lowe's on the daily chart that I've got in front of you here. It's our road and circled and as we can see it's a very key support level. We have the Canadian employment report out on Friday. Now that's expected to come in around about 7% if that disappoints then we could well see further Canada weakness and US dollar strength and certainly that's really the key line in the sand around about 10620 on the downside. If we break below that we could well see further losses towards 105. I think the bias at the moment remains very much towards 107 and 108 while we're above that trend line support from the 2012 Lowe's. So that concludes this week's weekly market update. Leads me just one thing to remind you of this Thursday at 3pm BST I will be hosting my monthly webinar with Colin Zizinski of the Canadian office where he and I will be chatting about some of the charts that I've shown you today but also I look at the general environment for stocks, currencies and commodities over the next couple of weeks. If you want to sign up for that webinar along the bottom here otherwise I will speak to you all again next week.