 Hello and welcome to CMC Markets and this weekly Monday webinar on the 27th of March, the last one for March, the last one for the quarter in fact, and Equity Markets looking a little bit soft as we head into the end of the quarter, I guess I'm not really surprised that we're getting a little bit of market softness, I think a lot of it is predicated on concern that Donald Trump's healthcare plans or actually his reform plans in general are starting to unravel and I'm going to go into that once I get the risk warning out of the way. So anything that you see or hear today should not be construed as trading advice but what I will be doing is looking at some of the key levels on not only Equity Markets but also Currency Markets and Commodity Markets and looking at the potential for further dollar weakness, we're certainly seeing the potential for a breakout there, we're also seeing potential resistance levels coming into play for Euro-dollar for gold, support levels in crude oil prices, support levels overall in Equity Markets as well after the gains that we've seen thus far this quarter and actually despite the fact that we've been in a slow decline for most of March for Equity Markets the S&P 500 is still up over 9% from where Equity Markets started in the aftermath of Donald Trump's win at the beginning of November, so while we have seen a significant decline in Equity Markets over the past week or so, we're not really in what I would call a significant sell-off mode quite yet, doesn't necessarily mean that we won't potentially move an awful lot lower but certainly in the context of where we started the quarter we're still in fairly decent positive territory pretty much across the board so let's make a start on the S&P 500 because the S&P 500 I think it's broken a key uptrend from the lows that we saw in December but we still remain significantly above the levels that we were at the beginning of November and the initial Trump dump before we started to move progressively higher over the course of the past few months now since we peaked in February March we've slowly been tracking lower and last week's down move on Tuesday was the precursor for a little bit of weakness and now we're starting to look as if we could well head towards what I'm initially identifying as a key support level around about 2300 and this I think really is the key story for this week the key story for this week is the unraveling at the end of last week of President Trump President Trump's health care reform plan and I talked about it a little bit in my Monday note earlier this morning he's in previous commentary Mr Trump suggested that any tax reform plans any banking reform plan would have to wait until his health care reform plan had been completed now that looks very unlikely at this point in time and it does rather call into question I think the optimism surrounding the rally that we've seen over the course of the last four months because of most of the rally I think was based on misplaced optimism that Mr Trump would be able to get through the vast majority of his fiscal reform plan now that has been called into question we've seen a significant sell-off in yields bomb prices have started to wedge back up again that's making the dollar less attractive so we've seen the dollar come off and it also means the reflation trade which was based on the prospect of fiscal stimulus has started to know or it does or needs to be reevaluated so looking at the context of the rally that we've seen as well we haven't really seen a significant pullback now we have the potential to see a significant pullback and a reevaluation of where US markets are likely to be based on the recent rake hike from the Federal Reserve markets was looking to price in two or three rate rises this year I still think that's significantly calling being called into question notwithstanding the fact that inflationary pressure that was starting to build at the beginning of this year has started to ever way a little bit we've seen copper prices come off we've seen iron ore prices start to come off more importantly we've seen oil prices start to come off so that inflationary pressure that was starting to be displayed within some of the input prices that we've seen over the course of the past six months does appear or could could well start to diminish over the course of the next few months and I think that for me is the important thing that's the important barometer of sentiment going forward more importantly we've seen a significant breakout in the dollar index and we can see that on this Bloomberg chart here of the dollar index if we look at the lows since the beginning of December we've broken below a significant support level around about 99 10 or if we've been traded below the February lows that we saw here at 99 99 20 around about 99 20 3 I think it was yeah around about 99 99 and a half so we're well below that now around about 99 and closing in on 200 day moving average and that's really the key level that I've got my eye on with respect to the dollar index the 200 day moving average why is that significant it's significant in the context of euro dollar if we look at euro dollar we can also see the 200 day moving average is very significant so why the euro dollar and the dollar index significant simple reason euro dollar consists of around about 57% of the dollar index the fact is we've broken above those peaks that we saw in December we've get we've gapped higher on the open in Asia for euro dollar but this 200 day moving average on euro dollar remains a significantly important level given how historically it's been important in the context of the downside when we were trading lower around about 112 113 in September and October of last year here it's a little bit a little bit messy but since since August September it acted as a decent support level for quite some time before breaking lower acted as resistance in November despite that spike higher and obviously that was the US presidential election spike higher as a dollar weakened we are now weakening once more and that would appear to suggest that we do have the potential to push higher but the key resistance level on euro dollar is the 200 day moving average which is around about 10890 10880 so there is a correlation between the euro dollar and the dollar index but in terms of overall dollar strength I do think it's significant that we've broken below those lows in the dollar index and we've also broken out in dolly in and the key lows that I was looking at on the dolly in this I know this chart looks a little bit messy I hope you'll forgive me for that so what I'll try and do is remove some of the clutter on this this series of lows through here around about 111 60 was significant I think in the context of the breakout so if we look at this 111 60 level here let's really break it out and zoom it in and it gives you a better indication of where we were that was really think the key support level on the way down we traded in a fairly tight range between 115 60 and 111 60 and have done for the course of the past few months but last week we broke below 111 60 and that for me was significant and we haven't been back above it since we broke below it at the in the middle of last week try to get back through it on Thursday and again on Friday we've now broken below it and we're finding support around about 110 15 110 20 so for me the significant breakout on dolly in on a technical basis was at 111 60 while we're below that then I think there's potential for further dollar weakness against the yen towards around about 109 40 and potentially even further to around about 108 and the 200 day moving average I think over the course of the next few sessions while we're below 111 60 that for me I think is the clear direction of travel for dollar yen I would only revise that on a move back above 111 180 and back through 112 in in terms of overall US dollar direction over the course of the next few trading sessions and for me that's important because I think in the context of the strength of the dollar that it's going to drive what equity markets do over the course of the next few sessions how we get lower is going to be problematic shall we say and that would suggest to me that the best way to trade this is to trade and is fade dollar strength so any rallies back to around about 111 and a half look to sell into them look to buy euro dollar on dips towards around about 107 and a half and also in the context of the pound which continues to remain remarkably resilient we're also closing in on some key resistance levels there as well it's article 50 which is due to be triggered this week I don't anticipate any significant sterling weakness as a result of the triggering of article 50 and there are there are various questions surrounding that and ultimately you know the triggering of article 50 is not surprised to me ultimately sterling short positions still remain a significantly elevated levels there are no more surprises to be had in terms of negative surprises of is RV Brexit scenarios an awful lot of them I think are already priced in so the only way the pound is potentially going to go lower for me is if we see a significant rebound in the dollar that for me I think is the overriding will be the overriding negative for a higher pound if the dollar rebounds at the moment we're looking at a resistance around about 126 30 but also the 200 day moving average coming in just above that around about 127 which also coincides with the February peaks so in the context of the weekly chart I'm also fairly bullish on the pound because of this bullish candle here albeit it is rather it is a rather sideways trend so this bullish reversal isn't really reversing anything as such per se but ultimately if we can break out through this 126 area and head towards the 200 day moving average I think the potential is for a move towards the top end of the range rather than the bottom end of the range and I think that's significant because I think sentiment is still so bearish against the pound that an awful lot of the negative news is already priced in and the fact of the matter is the the UK economy as it is at the moment isn't in and isn't in a particularly bad place yes inflation is rising and wage growth is weak but that is just as true in Europe as it is in the US so in terms of expectations around future central banks future central banks bank moves then really I think the likelihood is that the dollar long positions have more potential to unwind than say for example sterling short position so you know for me the context is this you've got these two moving averages here on the daily charts that are starting to turn positive the 50 and the 100 momentum is starting to turn on the 200 it's still very very negative and it's going to take a while to unwind that but I think we are going to remain compressed between these moving averages here on the daily yes we are overbought on the daily and that would seem to suggest that we could struggle to move much above 126 30 but overall I think the dips could be confined to around about 120 380 that brings me on to euro sterling please feel free to throw questions my way if you've got a particular products that you want me to talk about but there's also this factor being priced in here euro sterling now this is a four-hour chart and this is in particular what this is something that I'm particularly interested in at the moment euro sterling momentum is starting to turn negative that is potentially sterling supportive in the short to medium term so I anticipate as long as we stay below the series of declining highs here that we could well take out these lows here around about 85 90 85 80 and continue to trade lower if we look at the daily chart here we can see it here and we can also see that we are getting a little bit of a messy consolidation below these peaks as long as we stay below 88 on any any rallies back to 88 then I still think this potential head and shoulders reversal has the potential to play out now at the moment the support level for me is around about 85 80 this is a weekly chart that I'm looking at the moment we have got a significant amount of positive momentum here on the weekly will drill it down to the daily we are looking a little bit oversold on the daily but ultimately we're well back from where we were at the from the lows that we saw last week now there is a potential bullish reversal going on here but ultimately while we're below this trend line on the four-hour charts then ultimately I'm of the mind to sell any euro rally while below this peak here and this peak here is round about on the day 86 90 so stop losses above 87 really I think on any euro sterling rally for a move back to these lows around about 85 80 86 I expect the article 50 triggering to be potentially sterling positive it's a sort of sell the rumor by the fact type of scenario everyone is expecting it to be negative but I'm not really sure where the negativity is going to come from unless negotiations take a turn for the worse very very quickly and I'm not convinced that will happen given the fact that we have unresolved French elections and unresolved German elections I don't think we're going to move too far too quickly apart from obviously getting agreement on the residential status of EU nationals here in the UK and British nationals in the EU I think the low-hanging fruit will be quickly agreed and I think that should be potentially sterling positive in the short to medium term what else have we got this week well obviously we've got the next stages in the health care reform and the pulling of that the focus will then shift to tax reform banking reform I don't think you know I think if President Trump found it difficult to pass health care reform I think he's going to find it doubly difficult to implement any meaningful tax reform or banking reform I think this is where the the narrative which has driven the rise up in equity markets is going to be overtaken by the politics and the politics is probably going to limit further gains in the short to medium term does it mean that we're going to fall off a cliff I'm not convinced that we will but ultimately I think any further upside in equity markets is going to be very very difficult to play out given the divisions between shall we say the Trump administration and the internal divisions in the Republican Party now that doesn't mean that we're going to go straight line lower but what I would be looking for in the short to medium term is how the S&P reacts on any pullbacks to around about 2360 so we've broken lower we do appear to have posted a little bit of a reversal here which would appear to suggest that I think the initial impulse will probably be to try and squeeze the shorts on this particular down move and that could see us come back to around about 232345 2350 and potentially as high as 2360 when you look at the amount of congestion that you've got on the four hourly chart in and around this level here so you could see a little bit of a pullback on the S&P over the course of the next week or so around about 2360 but I think as long as we stay below 2360 then I think we'll go for a little trip towards the downside and 2300 it's always a bit dangerous to sort of try and sell into a significant move lower because US markets always have a tendency to try and squeeze those short positions so you might get a little bit of buying initially if you look at the daily chart you've got the 50 day moving average on the Dow we haven't really seen a significant retest of the 20,000 level as yet but again the direction of travel does appear to be quite clear here I think we do a little bit of short-term weakness back towards the 20,000 level I think initially but how we get there I think is going to be the big unknown and again I think the best way to do that is to drill down so maybe we'll get a potential move back to this series of lows through here around about 20,800 or there or thereabouts again draw a line through this look at the congestion levels on the short-term basis so you've got them really through here 20,780 and see basically see how the market reacts around those sorts of levels given the fact that on the four hour chart it does look a little bit oversold moving on to the FTSE 100 it's a similar sort of story we have seen a little bit of weakness there again the 50 day moving average but in looking looking at the long shadows on previous attempts to move lower we saw it here in mid-march when we spiked lower to these these lows here around about 72,60, 72,50 we've seen a low around about 72,50 today there's a decent there does appear to be some some buying interest around about 72,50, 72,60 if we do move below there then you're then looking at around just below 72,00 around about 71,80, 71,90 so they're the key support levels on the FTSE 100 for me we need to get really get back above 73,50 to diminish the downside risk on the FTSE but if the pound remains resilient then I think it's likely that the upside in the FTSE 100 is also likely to remain difficult to sustain there is also the fact that a weaker oil price is likely to diminish the upside or weaker commodity prices are likely to make it much more difficult for the FTSE 100 to recover back above around about 7320 in the short to medium terms and certainly keep an eye out on oil prices because I think they're a key driver of the FTSE 100 certainly in the context of this Brent chart here we're flirting with the 200 day moving average we haven't taken out last week's lows but I think it is significant that even though Brent prices are managing to hold up around about the lows that we saw last week WTI on the other hand are starting to look a little bit more comfortable below the 200 day moving average but we do we do need to see some evidence that we are finding momentum below 47 at the moment I'm a bit suspicious about the fact that on WTI we haven't actually as yet been able to sustain a significant bill at move below $47 so keep an eye out on WTI I would be looking for a sustained move below $47 on WTI suggest that we're going to head back to around about 45 being asked about sterling Kiwi certainly give you a can certainly give you a view on that I'm just going to see if I've actually got it here as a saved chart I don't think I do I've got sterling Aussie but not sterling Kiwi but that's no problem I'll just look it up here from the library sterling slash NZD there we go so right there so we'll look at that oops closed it by mistake let's reopen it and reset that and have a look at it well that's interesting yes looking as if it's about to break above the 200 day moving average but that in itself is not as important as this series of peaks that we've got through December for me I think you've really starting to run into a massive resistance level around about 180 179 75 180 yes momentum is positive for sterling Kiwi but when we're looking at this chart and we're looking at in the context of where it's been we're looking at a significant resistance level around about this 179 179 180 area and I know that's not much help but unfortunately for me I think if you're looking if you're looking at sterling Kiwi to take a position then really you've got to be you've got to be looking to run a looking to run a short position with a stop loss above 180 because if we do break through 180 then we could go quite significantly higher towards 190 and potentially to over the course of the next few trading sessions so this is another reason why I think when we look at the bearishness around sterling there is some evidence of a base being built in terms of sterling and sterling crosses and that's why I'm paying particular interest to sterling dollar but also euro euro sterling as well because there does appear to be some evidence that euro sterling is potentially topping out but also that sterling dollar does appear to be finding a little bit of a base we've got a big big support level at 120 190 180 we're finding support progressively higher levels against the dollar and that suggests to me that there's bearish sentiment towards sterling I think is overdone you hear people talking about cable at 106 and that for me I just think it's incredible when you when you're still above that big big base at 120 now I would change my view on sterling dollar if we broke below 120 but until such times as we do talk of 106 is I think it's not credible simply not credible because that would suggest that the economic fundamentals for the UK would deteriorate to such an extent and the US would be much much better to predicate a massive widening in yield differentials now that's not to say that that can't happen but I can't envisage a scenario at this point in time where that's likely to happen and as such I therefore I can only deal you know in the context of what I already know what I already know is article 50 is going to get triggered this week it's not really going to change the overall debate between the Brexiteers and the Remainers and ultimately it starts a process a process that's going to last for two years so the immediate action of triggering article 50 shouldn't be any more bearish than it was a week ago we know it was going to happen we know it's going to happen why should the physical doing of that change anything with respect to sterling so that's that for me I think is I think it's it's a nice news story but I don't think it's going to change the overall view now Aussie dollar being asked about Aussie dollar we had a bearish engulfing day last week we could well get a little bit of a pullback while we're above 76 but I think while we're below 77 then the bias is for Aussie dollar to weaken drift lower towards 7490 over the course of the next few trading sessions and I know that means that essentially the US dollar is going to strengthen against the Aussie but I think this is more of a commodities play and the fact is that we're seeing a little bit of weakening in commodity prices iron ore prices have come off quite significantly looking a little bit soft copper prices are also looking a little bit soft and I think that's likely to potentially feed into a slightly easier RBA approach to monetary policy going forward I don't think there's any prospect of a potential tightening of monetary policy and I think if anything we could see a little bit of a weakening in terms of sentiment towards the Aussie the RBA won't want Aussie dollar up at current levels and the failure to take out 7760 on the weekly chart big big big series of highs through a year through through this level we could see a little bit of a drift back down towards around about 7495 I don't really anticipate Aussie dollar going anywhere fast I think we're still in a range top of the range is 78 bottom of the range is around about 74 if we look at the dollar CAD dollar CAD is probably going to be a bit of a play on the oil price as well as obviously future US monetary policy but overall I would expect that the range that we've been in since the beginning of the year to remain intact top at 135 probably look for a retest of 133 and 132 potentially potentially a little bit of a little bit of a weakening on a slightly lower oil price but I don't anticipate oil prices to go much much below where they are now maybe to $45 but certainly no lower than that and that should be broadly supportive of the CAD but it's not going to send it out the range that we've been in over the course of the past few weeks cat Caron again that's going to be a play on ultimately if the euro continues to push higher I think European stocks could struggle but overall as long as we're above 49 30 on the cat Caron then I think we're probably going to trade sideways I don't see too much in the way of downside ahead of the French presidential election I think whoever wins they're going to be a lame duck president Marine Le Pen wins she's not going to have a parliamentary majority which means that she's not going to get her she's not going to get her vote for a referendum on the euro and if Macron wins he doesn't have a party he doesn't have a party base so ultimately he's going to have to try and appeal to the establishment IE the conservatives in the French parliament as well as the socialists in the French parliament so he won't be able to do anything like what he wants to do with respect to labor market reform fiscal reform because he'll be held hostage to the the socialists and the vested interests with respect to the union so for all this talk about labor market reform they'll have about as much success as Sarkozy did or as Francois Rialand did so ultimately it will be status quo he won't be he won't he won't be able to do anything close to what he wants to do and neither will Marine Le Pen so I think the risks around the risks around a new French president slightly overstated yes Macron is more euro friendly which means that ultimately the France will try and continue to muddle through whereas Marine Le Pen will probably be slightly more negative but ultimately I don't think either or we are to achieve much in terms of their manifesto commitments right okay just been asked a question by Scott you may have to direct it here so any questions please direct if I can type unfortunately I'll direct them here there we go so I've been asked one question by an attendee I just need to try and find that I still have a look at gold I tweeted a gold chart earlier today again the 200 day moving average big big resistance around about here so again that sort ties in with our slightly weaker dollar scenario and euro dollar significant that we rebuffed this level in late February and it's going to be another big test I think as we head in to the end of this month but also more importantly we've also got trend line resistance coming in from the July highs so I think the potential for further upside in gold is fairly limited going forward we need a significant break of this level here we need a significant break higher in euro dollar we need a significant break higher in cable and the likelihood is that we're going to struggle that's not to say that we won't get there but it's probably going to be a very messy move higher given that we're approaching some very very key resistance levels against the dollar in particular against gold against euro against cable but also I think in terms of commodity prices as well crude oil support of 47 dollars so I'm keeping in a very very key I'm keeping in keeping on some very very key levels across a whole range of products to determine whether or not we're going to get further dollar weakness I think in the short term there's potential for rebound but I think over the longer term if yields continue to decline then we could see further dollar weakness so what am I looking for on yields this is a 10-year chart that I'm looking for and this 10-year chart here I think is going to be very important we're still above the lows that we saw in January and February of this year and I think if we get a break of those lows then that could be the precursor to further dollar weakness so I'm looking at this level around about 228 on the 10-year Treasury if we break below 228 on the 10-year Treasury then we could see further dollar weakness so keep an eye out for that we're 500 points down five basis points down today 235.85 from the close last week around about 241 but certainly keeping keep keeping on that and if you look at this it's a potential double top on US Treasury yields so that could be very significant in terms of where the dollar goes to next as well so potential double top with support at 228 top around about 260 if we break below 228 then that could take us all the way back to this 200-day moving average at 199.50 so very very key levels on the dollar over the course of the next few trading sessions well that's I think that's pretty much it for this week I'll be posting this this webinar on YouTube so if any one of you want to listen to it back or recover any of the the points that I've talked about please feel free to do so if you want to fire some questions over to me on Twitter you can also do that I can be found at mhucin underscore CMC otherwise like to thank you for tuning in and speak to you all same time same place next week thanks a lot guys and have a good trading week