 Good afternoon and welcome to CMC markets on Monday the 24th of April and this week's weekly Look at the markets for the week ahead. My name is Michael Houston first and foremost. I'll be taking you through the oh the obligatory risk warning Basically outlining that anything that you hear in this video should not be construed as trading advice But ultimately is my personal view of where I think the key levels Are on the charts, but also what are likely to be the key factors that will drive Equity markets currency markets bomb markets commodity markets over the course Over the course of the next week or so so once once we've got the risk warnings out of the way I can get started and Not surprisingly in the wake of the weekend Election or weekend presidential vote In France we've seen a nice little pop hire in equity markets as investors pile in on the On the on the probable outcome that Emmanuel Macron who is a outsider is an independent outside the mainstream of French politics Will likely or in all probability become French president in two weeks time just under two weeks time on the 7th of May and An awful lot of this optimism is predicated on the fact that he will be facing Marine Le Pen Who tends to be what I would call a rather polarizing candidate? What if this what this pop doesn't disguise though is The fact that the French economy still has a myriad of problems that it needs to Navigate around but what you know what the vote has done is it's given investors a perfect excuse to pile back in to European banks and French and German banks in particular because it's taking the very outside risk the Marine Le Pen and Melon Kong the extreme left-wing candidate could have got into a runoff For the vote in two weeks time That's now not going to happen and the opinion polls those those great opinion polls that were so right on Brexit and Trump It makes it quite likely that Emmanuel Macron will become French president in two weeks time So what does that mean for the French economy? Well, if I'm honest with you not much I certainly don't think he's going to be able to move the dial significantly in terms of economic reforms over the course of His tenure assuming that he does become French president But what it what it has done is it's it's this pushed share prices of various banks Quite significantly higher certainly seeing it this morning in the share price of society general You can see that here Significant move higher. I think what is quite interesting with respect to this move these moves higher is while that is taken as above some previous peaks in Terms of European Bank King share prices What did what this what this rise hasn't done is taken us above the previous highs that we saw? 2009 and 2010 2011 Which would appear to suggest that there was an awful lot of I think Lazy money on the sidelines But ultimately it hasn't been significant enough to change the overall direction or the overall dynamics With respect to the French economy going forward Let's certainly look at society general as a case in point with respect to Where I'm the share price of French banks could go but also I think if we look at BNP Paribas, for example It's a similar sort of story with respect to the overall long-term direction of French banks ultimately they may be out of the woods But there's certainly still well short of the peaks or the levels that we saw in 2008 2009 2010 And that's reflected. I think in the cat car on we've seen it this morning here With this move back to the levels that we saw All the peaks that we saw in 2015 What we what I really would like to see with respect to this particular chart here on the cat car on is a move through 5300 now I've drawn drawn a horizontal line through the 2015 peak that we saw When the euro-dollar was down around about one one or three one or two one or three and The Dax was up at his previous record highs if we scroll it all the way back here We can see that while the Dax has made new record highs Well, we haven't done on the cat car on is really significantly get above this 5300 level and I think that's significant particularly if you go all the way back to 2006 and 2007 because we can see the peaks here in Early 2006 and then we can see the support here in early 2007 through here and here So this 5300 level that we've been looking at over the course of say for example the past week Oh, but the past the past few months is a very significant historical level and ultimately what we would I would like to see for further Progress with respect to the cat car on is for us to really sustain the move that we've seen this month so far to push through that 5300 level and Obviously the flip side of this particular story is the fact the euro's also taken a significant move higher as well now Generally the euro tends to move inversely to European stocks and by definition a higher euro Actually might act as a significant a little bit of a headwind to Further European stock market gains, but then then that sort of ignores the fact that we have seen Some significant positive economic data coming out of the euro area over the course of the past few months Which then leads us on to the event risks that we've got out later this week the European Central Bank rate meeting Now a few weeks ago There was an awful lot of optimism about the fact that mr.. Draghi might be tempted to talk about or at least set the ground for or laying Lay the groundwork for a potential taper of The ECB's asset purchase program Now he was quite keen to dial back that rhetoric in the lead up to the French presidential election Not really surprisingly and the latest inflation numbers would appear to suggest The inflationary pressure within the EU has Tempered somewhat over the course of the past few weeks. We saw the CPI measure to slide back from 2% to 1.5 But we do have a flash Euro CPI number out later this week on Friday and the likely outcome of those particular numbers is that inflationary pressure could well tick back up again, so Inflation is still the dogs that won't bark In the European Union at this point in time There is still an awful lot of what I would call uncertainty about where prices might go to next It's been an awful lot of chatter about the reflation trade and whether or not We'll get a significant infrastructure boom out of the US some of that has been tempered somewhat over the course of the past few weeks as Investors have cast doubt on the ability of Donald Trump to actually implement the type of program That he's been talking about over the course of the past few months and ultimately it is really about a gap between Rhetoric and substance with respect to President Trump at the moment He talks a good game But the big question is does he play a good game and at the moment There doesn't appear to be any evidence that he'll be able to deliver Anywhere close to what he's been promising now later this week He has he tweeted over the weekend that he would be outlining details of a tax reform plan Details are all well and good, but I would caution you that ultimately details are just that the details They don't outline the problems that he will face in trying to get those details Through the Congress and through the Senate and there's enough fiscal conservatives within the Congress to suggest that he will find It very difficult indeed to implement a significant and I say this is significant tax reform plan That being said we've seen a significant rebound in equity markets this morning Not only in Europe, but also in the US So you have to take that into consideration When you actually look at what the price action is doing and certainly if we look at this DAX chart here We can see that the oscillator starting to point upwards The the two lines are starting to tick higher and that does appear to suggest that we could see a significant move higher But what we need to see is a significant move above 12400 so I think there's a combination of factors here. There's an improving economic story going on We saw that in the PMIs last week the flash PMIs from France and Germany But there's also the prospect that the ECB Might have to look at tapering its bond buying program And if that happens then you could potentially see the yield curve in European bonds start to widen now It could start to move back into positive territory the gap between twos tens and thirties could start to widen out That's likely to be positive for European banks Irrespective of what the euro does because ultimately while wider wider yield Differentials are positive of banks. We've seen it here in the UK We've seen it in the US with respect to the latest earnings announcements from US banks, but also UK banks wider yield Differentials improve profitability Therefore we could see further gains in European banks so certainly keep an eye on those particular factors. They are certainly going to drive risk sentiment going forward. I Think a key barometer of that will be the tone of mr. Draghi's press conference on Thursday, so not expecting any surprises from that meeting But what we will be looking for is whether or not the ECB Decide to upgrade their inflation forecast and more importantly upgrade their growth forecast So the tone of the press conference will be key in terms of the overall direction For European markets going forward and stock markets and banks in particular. So Looking at the the DAX at the moment. We're looking to consolidate this move higher We've gapped higher then that would appear to suggest that any pullbacks are likely to find support around about 12,100 12,200 I would expect that gap at some point to be filled over the course of the next few weeks I would be very surprised if it remains unfilled over the course of the next few weeks Let's face it. There's still quite a long way to go between now and the 7th of May I mean while an awful lot of people would say a Macron win is a done deal It could well be but for me I think the margin of the win will be just as important as the win itself and there's also the fact Will mr. Macron be able to deliver anywhere near to what he was being able to promise in The lead-up to his campaign. He's talked about Tax reform he's talked about Making changes to the 35 hour working week. He's talked about getting unemployment down to 7% This is all against the fact that he won't have any representation or very little representation in the French Parliament Nicholas Sarkozy tried to implement tax reform. He tried to implement Significant reforms and they subs and he ran into the unions and we all know that generally French generally love a good old a good old strike when they don't like any particular reforms that the government Likes to bring in so the obstacles for mr. Macron to be a successful president are very high indeed and That could well take some of the luster off the euphoria that we've seen over the course of the past few hours So let's let's look at the footsie 100. We've seen a significant move higher in that But what's quite interesting is we haven't been back through this 72 45 72 50 area here We're running into a little bit of resistance through these series of highs Sorry, these series of lows through March and April. So if I draw a horizontal line through that Here just going to drop that in there between 72 45 and 72 60 There's certainly significant resistance as born out by this series of lows Through here, so I'll be keeping a close eye on this this this corridor of resistance through here as obviously as well as the 50-day moving average and The resistance that we saw between 7400 around about seven that the 7400 level that we saw at the beginning of the month But certainly we've seen record highs again today in the footsie 250 So once again, that's a fairly positive sign And that's despite the fact that the pound has continued to remain fairly robust despite the fact that It's it has weakened a little bit again against the euro So footsie 100 still looks fairly positive But it's running into a little bit of interim intraday resistance around about 72 50 72 60 So I'll be overly cautious about getting overly enthusiastic about that We've looked at the the DAX we need to sustain a move through 12400 I really think to really think that we're potentially going to go an awful lot higher there But certainly momentum does appear to be in its favor and ultimately I think if you if we're looking for an opportunity to buy dips on the DAX then really you've got to look at this sort of trend line support through this series of lows through here as well as this This area of resistance through around about 12100 so look for any pullbacks there as well It's a little bit expensive to buy German equities at these sorts of levels and it's something I'll be very very cautious about at this point in time Any questions that you might have please reply to the to the message That I'm about to send out here to this message for any questions But I'm now going to move on To Currencies because we've seen significant We've seen some significant break breakouts in Currencies against the dollar over the course of the past week or so last week We saw a big breakout in the pound against the dollar or come to that in a minute But I'm going to focus at the moment on the breakout that we've seen this morning in the euro We've broken above the trend line resistance from the highs that we saw last May At around about 116 I have drawn it through those highs that we saw in mid-November that was down to the Trump That was that that was the Trump electoral win which saw the euro spike briefly higher Before closing pretty much on the lows of the day and that's really why that I've I've drawn the line through that peak there because it was such a short-lived move that ultimately For me, I'm prepared to look through it so Looking looking at the cat. I've already talked about the cat So I won't go over that again talking about the euro dollar right now We are likely to find a little bit of support around about 108. Why because we've got a series of highs all the way through here The 200-day moving average is likely to be a key support as well We've had a little bit of a move down below it and that can be signified by this particular This particular line through here So around about 108 20 108 if we fall back below that then we're likely probably going to drift back down towards Around about 107 20 Bob while we're a while above the 200-day moving average and this trend line resistance Or above that then there is potential for us to move higher But ultimately we're still in the uptrend that we've been in since the beginning of the year So it's quite conceivable that we could drift all the way back down here again given the fact that We're probably going to get some more details out of the US later this week Which could be dollar positive and could push the euro lower And also we've got a whole host of economic data from the US We've got the first iteration of Q1 GDP out of the US on Friday That's likely to come in a little bit softer from Q4 but we've also got durable goods as well and and Some and some significant Fed speakers as well and federal reserve officials are still talking about the Possibility of another three rate rises this year. So that again could be dollar positive But ultimately at the moment while we're above 108 Then the prospect is that we could push up towards 110 111 but ultimately we're unlikely to move out of the range That we've been in over the course of the past few weeks So that's the outlook for the euro dollar at the moment while we're above 108 Then the prospect is we'll probably go and revisit the highs around about 109 Similar sort of story euro sterling we have broken higher But again here what what is quite significant with respect to this is We're running in to a significant resistance levels again on on the euro sterling between the 50 100 and 200 day moving average So between 85 45 and 85 80 the significant barrier resistance Where these three moving averages converge and that's before you even start talking about this series of highs Through here as well, which is likely to Which is what which is likely to act as a significant Selling area there's certainly significant selling interest going to be going through that particular area as well as Trendline resistance through these peaks through here. So euro sterling We've seen a significant rally in that, but I still don't buy into a particularly strong euro going forward I'm much more of a sterling bull than I am a euro bull and that's borne out by this chart here I talked about it in a couple of my posts last week and I stand by it. We've seen a significant We've seen a significant rebound in the pound over the course of the past week or so and What's driven that is the breakout of this triangular consolidation that we've been in Since the beginning of December last year if we draw a line through these peaks here We draw a line through these lows here. We've got a classic Triangular Collidation and a classic triangular breakout now this pattern has taken place over the course of about three or four months We've broken above the 200-day moving average the 50 and the 100-day moving averages are starting to Point upwards which would suggest to me that the next move in the pound is likely to be Significantly higher towards 130 and potentially 133 now how have I arrived at these targets? It's fairly simple We basically take the apex We project the apex of this particular move from the distance between This high and this low here So I've taken the this high and this low here measured the point move up and projected it from the breakout point now My initial target for the pound against the dollar is around about 130 40 on this particular break out But overall you would expect over the course of the next two to three months For that to move to around 133 now you'll you'll you'll read a host of commentators talk about the fact that the pound Could well actually this could be a false breakout and we could move back lower and that is a significant possibility I will not deny that and That that that is a worry that is a worry But this is what this is this is a training plan and ultimately you have to have a training plan With that you have to have effective risk management. So My concern that this plan or this particular move might run out of steam would be is if we go back below 127 and a half. So this could be a potential flag formation here from the initial move higher That would become that would unwind if we drop below 127 50 and I'll bring us all the way back to 125 The market is looking a little bit overboard at the moment But overall on the basis of this technical analysis break out Then ultimately for me based on the price action at the moment The line of least resistance at the moment favours a move towards 130 and 133 While above 127 and a half And that also coincides with my view that ultimately the dollar could about the US dollar could be I'm about to embark on a little bit of weakening over the course of the next few sessions So my bias for sterling at the moment is more positive than negative I would revisit that if we broke below If we broke below 127 and a half But certainly for me the balance of risks still remains Towards the upside as opposed to the downside is that I think an awful lot of the bad news is already priced into the pound And as such we could potentially move higher also I think people are much more 50 50 with respect to the pound at the moment because of the The short squeeze that caught an awful lot of people out On this move up here. They're looking to reinstate short position somewhere up here We could come back down here But overall I would still expect the pound to move higher over the course of the next few weeks and months I would only rip up that scenario if we drop below 127 and a half and even if we do Then I think the the downside will come in around about 125 80 126 and that's what's important about being Being a trader you have to learn to be flexible and not be wedded to a particular plan if you're wrong You're wrong get out and then look to get back in and change your view Depending on the change changing circumstances of the charts So I've been asked if sterling Kiwi is tracking sterling dollar. I think it's a little bit dangerous to sort of look at Comparing the two because the Kiwi is certainly in no way comparable to Sterling dollar but If you if you want clues as to with respect to what the the pound might do with respect To the dollar then looking at euro sterling or playing it playing euro sterling will probably be a safer option of being longer sterling Against against the dollar than it is against the Kiwi. I have a quick look at sterling dollar though for you Just to get a fair idea of where we are with respect to that To see if that can give us some clues on the next direction or the next move in the pound Certainly the break above the 200-day moving average is Positive and certainly looking at the price action on this. It is fairly similar in terms of the move higher so I Was probably look the clues What I wouldn't want to see on sterling Kiwi is a move below 181 40 that would worry me a little bit because that would suggest that we could get a move back down Towards the 178 level and potentially even a retest of this series of highs through here around about 179 80 So keep an eye on 181 40 on sterling Kiwi 127 and a half on sterling dollar Moving on to dolly end Had a nice little risk-on move higher in Dolly end which has taken above which has taken this above This cloud support on the four hour chart So we can see that there's decent support around one oh one one oh nine fought one oh nine eighty on the cloud On the cloud on the cloud cloud support here But what's also quite interesting is this one oh nine forty area here, which I talked about In my chart forum update earlier this morning Last week's peaks one oh nine forty fifty are likely to act as a support in the short to medium term and Given the fact that we have the Bank of Japan rate meeting Tomorrow morning That's going to be a kid. I think that's going to be a key driver as to where dolly end goes to next So what at the moment? We're above around about one oh nine eighty don't rule out a move down to one oh nine forty fifty In the short to medium term with respect to dolly end But it does appear to have found a little bit of a base around one oh eight Which would appear to suggest that any move down is likely to find a little bit of support in this cloud area here between one oh nine forty fifty and one oh nine eighty But that doesn't mean that the upside That doesn't mean it now opens up the upside because we still have significant resistance all the way through here At around about one eleven sixty one eleven fifty so For dolly end what I would suggest is that you're probably going to find the dips are going to be bought into around about one oh nine forty Fifty and we could get a move back to around about one eleven sixty But ultimately it would be a surprise to me if we moved much beyond one eleven sixty And we continue to trade sideways as we have been doing over the course of the past few trading sessions With resistance around about one eleven and a half support around about one oh nine forty fifty So that's what I would expect the range for Dolly end to be Given the fact that we've got us GDP numbers out later this week that are likely to be On the low side of expectations. They're certainly expected to be weaker than q4 Which was around about two point one annualized Probably expecting a number in the region of around about one point three for us GDP We've also got UK Q1 GDP first iteration of that that's due out on Friday as well That again is likely to be Significantly weaker than the Q4 number of naught point seven But it's still expected to come in and in the region of around about naught point four percent Which when you consider the Armageddon was being predicted in the lead up to last year's referendum vote isn't too shabby and The fact is that the retail sales growth that we were we were seeing towards the end of Q4 Was unlikely to ever have been repeatable as we head into Q1 and the triggering of article 50 Triggering of article 50 has now happened Ultimately now we have an election coming up in in the next four to six weeks It would be a significant surprise indeed if the Conservatives didn't win that election Given the calibre of the opposition at this point in time. Certainly the markets aren't pricing in the prospect of Any surprises there in the same way they're not factoring any significant surprises in the French presidential election, so I Think it's unlikely that we will see a Significant amount of sterling weakness unless the polls shift markedly towards say for example anything other than a significant Conservative majority, but I've learned From the experience of 12 months ago that you can never take anything for granted where markets are concerned and neither should you as a trader You should always trade with an effective stop loss and never put all your eggs in one basket So let's move on to US markets We've looked at European markets. We've looked at UK markets. We've also looking at US markets And the likelihood is we're going to see a significant move higher on the US open today with the US 30 breaking above that trend line That I drew in last week from the peaks that we saw in February We really need to see a significant move above the 20,800 level we have really struggled in and around that area apart from that spike that we saw in early April We've really struggled to really sustain a move significantly above 20,800 so I would want to see a significant Move beyond that to suggest that we're going to head back to the highs that we saw In the middle of March around the 21,000 area for me. This is all about momentum But it's also also about confirmation You can see the move higher, but it needs to be confirmed as well and certainly in the context of the S&P We have moved a little bit higher But again, we're below those levels that we saw in the middle of March Even though we have managed to sustain a move higher through 2380 or that those peaks that we saw at the beginning of the month around just below 2380 If we can sustain that move higher, then the likelihood is we're probably going to retest March But the S&P is probably going to be the leading indicator rather than the Dow It's probably the more reliable indicator and as for the NASDAQ well that continues to lead with new record highs Over the course of the past week or so and we can see that From this particular chart through here That seems to be the gift that keeps on giving 50-day moving averages. I think the key support there. So Look look for a move through 5,500 Hopefully that will drag the rest of us markets up with it But I think once again it will be the strength of the dollar that could dictate whether or not us markets go higher and I'm certainly not convinced that the The US dollar will be able to revisit the peaks that we've seen in previous Rebounds over the course of the past over the course of the next few training sessions We can see that here. It's clear to me From this chart here that the dollar index has the potential to roll over that's likely to be supportive overall of The euro it's likely to be supportive of the pound So the key the key level that I'm really looking for on the dollar index if we can just draw this in With a horizontal line through here is likely to be around this 98 1999 area What I want to see is a sustained move through here Which would appear to suggest that there's a potential top-in for the US dollar and we could well start to track Lower over the course of the next few training sessions And I think that's important as well What we need to see is a sustained move lower in the dollar index that will be that will be predominantly supportive of euro dollar But overall it's probably going to be a fairly gradual process and we'll head back towards 98 Which would probably probably mean that we're probably going to head back towards 109 110 euro dollar But I don't think we're going to go surging significantly higher Don't forget also that the dollar index 57% of it is euro dollar so they do tend to act as a decent proxy for each other Let's finish up with gold Because ultimately the gold gold has probably taken one of the biggest hits on the back of this presidential vote But what it hasn't done is hasn't hasn't dropped significantly, you know, and I think this is the key thing with gold despite the fact that Economic conditions have been improving over the course of the past few months gold has still been trending higher and The reason for that I think is that there is some doubt as to whether or not we have completely removed political risk from the equation French elections may well go according to plan and Macron may win German elections may well go according to plan and Angela Merkel may win But even if she doesn't Martin shorts will win which ultimately you'll have a pro-eu candidate No matter the outcome but ultimately the problems in Europe haven't gone away the banking system still remains vulnerable the Italian banking system still remains vulnerable and You've also got the problems the geopolitical concerns with respect to North Korea, so Factoring all of that in gold still remains a fairly decent hedge We could see a little bit of a decline back towards 1240-1250 but overall the uptrend that's been in place since December still remains Significantly intact and I expect that to remain the case over the course of the next few sessions crude oil same old story it's in a trend it's in a trend will continue to be in a trend and Ultimately, I would expect that we're going to continue to play the range on that over the course as we have been for the last six months Bottom end of that range is round about where the 200 day moving average is between 50 and $51 a barrel Top end of the range around about 55 60 I'm really not expecting any significant fireworks on crude oil prices Over the course of the next few trading sessions or the next few weeks And I'll probably be saying giving you the same old spiel In a couple of weeks time next week is a bank holiday. So there won't be any webinar next Monday So the next one will be Monday week, but ultimately if we look at copper It's a similar sort of story with with respect to commodity prices here as well Decent support around the lows are around about 243 250 and decent resistance of around 273 I think we've seen the commodity price move higher and now really it's a question of what happens with Growth prospects going forward China does appear to be showing signs of stabilizing at fairly higher levels and US markets or US the US economy is likely to pick up in the second quarter It usually tends to go through a little bit of a first-quarter slump in the Q2 and Q3 It does tend to pick up as US driving season gets underway So the slowdown that we're seeing in Q1 is unlikely to be sustained in Q2 But at the same point, I don't expect it to take off either It'll do what it'll do what it normally does it picks up on a seasonal basis going forward Okay, so that's it for This week unless anyone has any questions on anything that I've covered anything that I've discussed Then Ultimately the key things that I will be looking out for later this week will obviously be the Bank of Japan rate meeting Any further details on us tax reform European Central Bank? Press conference from mr. Draghi on Thursday and obviously the Q1 GDP numbers from the US and the UK on Friday as well as Eurozone flash CPI numbers for April if that's all there is then I'd like to thank everyone for Thanks everyone for listening in and I will talk to you all again in a couple of weeks But I think before then we have non-farm payrolls Next Friday Friday after next post Bank holiday weekend Where you're more than welcome to join me in Collins is in ski talk about the payrolls data, and that's the Friday That's that's that's that's next Friday week