 Okay, welcome to the CMC Markets Weekly Charting Analysis. My name is Jasper Lawler, your host for today. The webinar scheduled to last about 30 minutes. Sometimes we'll go over a bit. I'll typically stop the recording, but can always cover some extra questions if you have them. Feel free to ask a question or make a comment anytime. Always more fun if it's interactive, but I'll try to respond as quickly and as best I can. We're just getting through the risk warnings on the screen here. I advise you to take heed of. The talk at the moment is an asset class that I don't always focus on in these webinars, but I'm going to touch on briefly. It's the bond market really, specifically Gilts. It's not one of the most popular products traded in CMC markets, not especially sure why. It's maybe a bit more niche, arguably. Sometimes not as much volatility, but there is a bit at the moment. I typically have them up on my screen down here, just these three main ones. This is our proxy for the German. These are all 10-year bonds, 10-year government bonds, Eurobund, UK Gilts, and the US 10-year Treasury note. As you can see, Bund is kind of flat today. Treasury notes, obviously, we have moved into the US session yet, but pretty flat. Gilts selling off quite a lot for a Monday morning. Let's pull up the chart here and you'll start to see why. I have posted this on the chart forum. This being the daily chart, but it makes a bit more sense if I show you the weekly chart. Here are our highs over here in 2011. We obviously had a big sharp rise in yields there. We've pretty much just reached that old resistance level and formed a fairly classic-looking double top pattern. We've rolled over through the neckline. As of now, we're sitting on about a 61.8% retracement of this rally up. Basically, I've just placed, if I could drop down to the daily chart again, this was good old Brexit the day before and this is the day after. This whole move higher is basically just because the Bank of England had some pretty sour forecasts on what would happen to the UK economy, still does, if we voted to leave the EU. The expectation was that once we did vote to leave the EU, that the Bank of England were going to come in with a bunch of stimulus, possibly involving buying government bonds. That did happen. That happened on August 4th. That's this big move up here. Actually, what happened is we topped out about a week later. That was pretty much the top. Did a little false breakout over here. Tried it again, tried it again. Whatever that is, fifth time of trying, the market realised there was a distinct amount of selling going on here. Overcame the buying and we've rolled over ever since. It's been quite a sharp decline now. When you get a sharp move in any market, it sort of rubs off on risk sentiment a bit. Theoretically, bonds are something you buy as a more conservative investment. If bonds are going down, typically, what you would expect is that equities move higher because they're a riskier investment. People are moving out of safer investments into riskier ones. That's not so much the case at the moment, just because a lot of the reason people have been buying stocks is because, quote, unquote, it's the only game in town. As in, bond yields are so low and our savings account interest is so low that you can't really make money anywhere else. Obviously, with the exception of non-financial assets, properties and plastic cars and fine art and all the rest of it. All those prices are massively pushed higher. We're in bubble territory for a lot of assets, riskier assets because you can't make money in a kind of traditional way in the money markets or in bond markets. That's where we are. As a result, the fact that yields are going higher, yields go inversely to prices. These are prices. Prices going down, yields, interest rates going back up, that makes stocks relatively less attractive. The dividends that you would earn on stocks are still higher than these yields, but the gap is smaller now. Making stocks relatively less attractive than they were just a couple of weeks ago in comparison to bond markets. Let me know if you want a bit more explanation on that. It goes some way to explain why we're seeing a bit of decline in equities and why we've been in a bit of a ... As this decline in bond markets been happening, we haven't seen any massive decline in stocks, but we have seen a bit of a range taking place close to the highs of the year. I'll start with US stocks. This is our weekly chart, always best to typically want to do a bit of your charting on a Sunday or on a Monday. Just get a read on where you think. What color do you expect this week's candle stick to be in the most simple terms? That should form the basis of how you do your trading this week. It's an incredibly simple way to put it, but really that clears up a lot. If you look at this weekly chart, this week is going to be a down week. Obviously you want to be looking for short-term selling opportunities, vice versa if you think this is going to be a green candle this week. You're looking for buys. It's not too straightforward. It often isn't as to which one of those candles it's going to be, because we're basically in a range, as I've mentioned here in a very simple chart forum note, for 1, 2, 3, 4, 5 weeks. We've put a pretty much been capped between this old resistance here and this old resistance here. These are these weekly levels of defining the short-term range. If we drop down to our daily chart and we find a bit of a chart pattern here. We've got this triangle in place which has broken to the downside. First sign of weakness is the breakdown. We've got a reversal of that long-term support as you might expect. Then reverse somewhere in the vicinity of this trend line. Also the breakdown here. Obviously we had this, this is the daily candle. You can see that where it took out the low of that day, that's where we've fallen away from again. A breakdown, a touch of the long-term support, hitting that resistance again. Naturally you would expect maybe another go at this support, but whether that support gives way or not is hard to tell. The evidence would suggest it will. To me it looks like a lot of selling came into the market. Price has reacted. But the big sellers, they don't want to be selling down here. They want to average in. This to me looks like distribution. We're in a bull market, so that could easily be wrong. I should qualify myself there, but that's the way it's looking at the moment. Big sell, consolidation, distribution, people trying to buy the bounce. The people that were selling up here don't want to sell here, but they're selling at that long-term previous resistance. Eventually the market is going to give way to the downside. That's the way it's looking to me. It does look slightly different in the UK because while the US stocks have been down for two weeks, we actually posted an all-time record high on the Fitzy 100. Obviously the pound playing a big role in that. I'm not going to go over all of that again because I'm sure you guys have read that ad nauseam at this point that the weaker pound is helping UK stocks. But there's this short-term chart here, so I want to go over what we were looking at here. This being the daily chart. Obviously the trend lines always go off a bit when you switch between four hours and daily. This happens in every chart package. But that's that trend line. We've got to close down there below that trend line. We're down here. We've moved below this 50-period moving average on the four-hour chart, but of a sign that the short-term trend is turning lower as was the break of that trend line. We've got a breakdown and a bit like US markets. We've got this long-term resistance here, which has then acted as support on the downside. I've put that as the previous peak, but obviously these levels down here significant too. We've had a rebound off there, but that rebound stalled at... Sorry, I'm flipping between time frames a lot. This was the low here, so a bit like that other chart where we had the low, and then we broke down through it. We extended the low and then we came back and tested where we broke down. That also happened to be if you'd drawn your Fibonacci's where we had the 61.8% fib. If Fibonacci's they come in for a lot of criticism, you just say, oh, if you plot enough levels, one of them will work. I tend to just stick with the last two here, the 61.8 and the 78.6, because they have a deeper retracement. The shallower the retracement, the bigger the chance that you're wrong and then it extends lower. Obviously you can miss 50% retracement if you only wait for these two, but by its nature, if you're waiting for the bigger pullback, if you're cutting your losses, if the market makes a new high and it's no longer going to downtrend up here, that distance between 61.8 and the highs is obviously smaller than if you're using a 50 or a 38. That's what we've got here. Obviously the market's in a bull market, so there's a slight tendency to try and push higher, but it's only made it as far as that daily low and the 61.8, and this 50 period on the four hour kind of playing its part in this selloff as well. Moving average is it's really a personal preference thing. How quick or slow do you want your moving average to kind of reflect the change in the trend? You can use a 50 hour moving average on the four hour or even on the hourly chart as a change in the short-term trend, or you could use equally a five or a ten day moving average. They are basically the same thing, it's just a matter of how you're looking at them. I mean I say the same thing, they can capture the same thing. So this to me is a confirmation of that judgment from the other, from the US 30 chart that we've taken out some lows here. We've pulled back and it looks like we're angling for another push lower. And one target to look out for is this low down here, which lines up quite nicely with this 61.8. Mine says 100, just because of the way I've used the fibs, it says minus, but you know that's more like the 161.8% fib extension. So again we're pushing into this longer-term resistance turn support, so obviously it can hold, but a break, you know I don't think there's too much stopping us from getting down to these kinds of levels, maybe even this big daily low down here, which would basically put us in that sort of 6800 type vicinity. Let's have a switch across to Germany. The range is even more clear cuts in this Germany 30 chart. Again this is a weekly chart and arguably we were still part of the trend during these three candles. It's not entirely fair, but we haven't gone anywhere outside of those three candles. So one, two, three, four, five, six, seven, eight, nine, 10, 11, 12, until our 13th week of trading in a range in the Germany 30s. So you know, there's not a trend taking place to adjust your trading accordingly. On the shorter term, you'd expect coming up into these levels, you know maybe to get another reaction again, and if not there, you'd expect up at the top of the range equally. Down at this low is a bit close to the middle of the range for my tastes, but these lows down here, down to this low, down to this low, still pretty much part of the range, and you could expect some sort of reaction there. Worth looking at how the momentum is really compressed. So depending on which trend line we get a break from, looks like it could be the upper line that breaks, which would suggest a push higher. That would obviously go counter to what's happening in the other markets, but we've not seen such kind of an obvious kind of break down in the German market. It's just been trading sideways. Over to the FX market. Plenty of ranges happening at the moment. So Euro, obviously the most clear cut advantage. This is just a short term range that I kind of zoomed in on here. Signs that this last week was quite a nice trend in the Euro. This could easily continue, but we've come into an oversold area just about, and we're coming into this daily swing low down here. So already getting a bit of reaction before getting to that area. But I would say this trend line and then obviously that big Brexit spike low, being the kind of two areas you want to look for the lowest risk possibilities when it comes to a reversal, higher back into the range. But being open to the idea that actually maybe this trend continues to the downside. What evidence do we have that's happening? Just that there's been some lower highs being put in on the weekly chart. You know, the fact that we just keep edging slightly lower. And the lows, you know, that was quite a big volatility breakdown there. So if you're calling that, the kind of range that we've been looking at, kind of equivalent looking range that we were looking at in the stock markets, we've seen a breakout of that range. And this is big support down here, but that's the kind of volatility you need to sustain a break lower. So I think the mentality here is, you know, looking out for these two support areas to work, looking for some reaction off there. And then, you know, trading that breakout to the push high on the short term, or looking for pullbacks, a touch of that support, if I may as well go down to the short timeframe, kind of say what I'm talking about here, three hours. You know, we're looking like, you know, we want to see something like down to here, and then, you know, up here, this kind of reaction, then a pullback, you know, obviously, or or this, and then trading that or a pullback for for signs that these support areas are working. But obviously, if we don't get that to that, we stall again around 110, which is a big psychological level, which is kind of where we are at the moment. If 110 proves a bit of a barium, we start pushing down. Yeah, I think that will most likely happen, we'll get down to one of these areas. But if we again, we fail at 110. It's a good sign that the downtrend is is picking up some momentum, and we're actually not going to hold the support. So it's one of those where, yep, there's a support, we want to look to buy for it. But, you know, you can just chuck your limit order to buy in there. That's certainly a way many people can do it and you can make money. But you know, an alternative, if you have the time to look at the charts is to wait for some sort of reaction and trade the break or the pullback from that break. Stirling obviously was coming in for some early selling today. Again, difficult difficult chart to be trading, but a bit of a kind of triangle pattern, showing itself here from that extreme low thing is this low. I mean, it's all in our charts is actually not bad, because it's it's basically drawn from 120. So our charts actually a bit below 120. If you were to assume that the low was 120 on that day, actually, this trendline works slightly better. Yet it's, yeah, so it's calling that low 120 up to there. And you can see that we're we've kind of edge below it. And now we're tracking back down again. So, you know, hasn't been heavy selling obviously a good dose of uncertainty. No one's really sure if we deserve to push sterling below 121, particularly the Bank of England. Do they really have the ability to cut rates again? You know, I think that's pretty debatable, given the current economic scenario, particularly if inflation is rising, we'll get a better idea of that tomorrow when CPI comes out for the US and the UK. Obviously, you know, the the other reason to push sterling lower is as a US rate rise. But you know, I think that's that's already factored in with sterling at 120. I mean, to justify moves much lower, it's it's it's the political uncertainty in the UK. And it's the prospect of another rate cut. I don't I don't see the Fed getting aggressive enough to really justify the sterling down at these levels. We've known that the Fed's been keying up for a rate rise this whole year. So I don't I think that's it's hard to justify moves lower, basically from the dollar side, unless US data really starts to ramp up. And next year, suddenly we're expecting, you know, rate rises every couple of months. But that doesn't really look to be the case at this point. I got a question on Dolly Yen. I'll get to that right now, Richard, if that's all right. Typically, just cover those three major pairs. If there's any other currencies, anyone wants me to have a look at just give me a shout or happily do so. So it's here, Richard and everyone else. This is our this is our daily chart. I'm sure you've all got something very similar on there. We have that triangle pattern. We've broken the the top line of that triangle pattern. And we've run into this little super simple technical analysis at this point. We had a triangle, we got a breakout from the triangle, but we've stalled at, you know, this this resistance area at the 104, which was one of the peaks that we used for the triangle pattern. So that will often happen. To me, the pullback has been minimal that that that's pretty much a bearish engulfing candlestick there. I mean, ideally, you want to see a bit of a kind of pop above the high to make a higher high to but the body engulfs that previous body. That's a bearish pattern at a resistance and it failed the next week pretty much. We've pushed back into those resistance areas at plus 104. We haven't had the close above that peak yet. But to me, you know, maybe if you include this little short term trend line here through seems to be working quite well from those pre you can even extend it back here a little bit. Sometimes the these internal trend lines work quite well. That seems to be defining the trend. So to my mind, I don't think the price is going to pull back much further than this rising trend line. Or the again, I've got this the 50 period average moving average on the four hour chart going, you know, which has kind of worked quite well here. You know, I think I don't think the price should if it's going to break 104 30 in the short term should go much lower than here. You know, if we do get another pullback to 103 again, then it just I think the breakout maybe is less likely. But again, you've got to assess the you know, if this doesn't work, then you know, still, you know, still keep confidence in your long term. I mean, I say yours. In my case, I'm looking at this as being a 104 30 possible breakout here just because we haven't had much of a pullback yet. And we've got that breakout that triangle pattern where the projection should be higher. So kind of base case, you know, expecting that longer term push higher. You know, so this first support doesn't work. Then you obviously, you know, you reassess and look at the next support below that 103, then I think that probably changes the picture somewhat. And, you know, it looks like would hold the range. Should we get through there? You know, the range being not so much the triangle, obviously, but more like this sort of 100 to 104 time range. I hope that makes sense. So we've got a few minutes left just to go over the commodities here. Something before I do get to the commodities and probably worth mentioning, obviously the main economic event this week, probably you'd be the European Central Bank, I say probably just because they're not likely to actually do anything. But we are, we do have, we have had Eurozone inflation today, you know, rising inflation, increasingly a bit of a concern. And that we did have those rumors a week or two ago that the ECB had been discussing tapering their QE program. So if you get that QE tapering alongside the Bank of Japan, potentially tapering their program, focusing just on yields rather than the number of assets they're buying, higher inflation in the UK, arguably preventing the Bank of England from doing more. And the Fed raising rates is all a picture of central banks pulling back a bit. So that would definitely be one to want to look for central banks pulling back, you know, when they've been one of the major forces behind the low yields that have made stocks more attractive than that would be, that would probably be a bearish sign for the market if we get some extra indication from them that they have in fact been considering tapering. They'll get questioned on it. I would imagine that Merrill Gregory will probably give quite a straight answer to say that they weren't actually considering tapering. What people are actually the general market consensus at the moment is that they're going to extend the life of their bond purchase program. And they're going to have to make a decision on that sooner rather than later because the end of the program is March. But I would say it's probably not going to be this month. You know, it's more likely to be December when they offer some sort of idea on that. Nonetheless, the fact that we had that big sell off in the Euro did certainly combine with more hawkish talk with the Fed, but obviously happened in the week pre this ECB meeting as well. Anyway, so now I will go to oil firstly. So again, again, just looking at a long term level, you know, this is like the highs of the year. We got a couple of false breaks on the day and we pulled down. We had three days of declines. So then if you do go down to the short time frame that I had on using this peak, we dropped back from the 61.8. You know, if you are struggling to get hold of the if you use the if you use the peak up here, we haven't actually got to we came just shy of the 61.8 level there. So maybe some room, you know, if we are looking for this long term level to hold, maybe some scope for market to roll over again up here. But at the moment, it's looking relatively strong. I mean, you know, I think you're sort of barring that little false breakdown. Generally, the support levels holding quite well. So people who've been buying into this support, this little short term drift down seems to have seems to have kind of ended. So just look maybe for anything up here because we are we are basically at a long term resistance. Obviously, we're in it, we're in an uptrend, but just keep, you know, keep an eye on that resistance holding. So we've got that bold line in itself, just draw that from the old highs and those two fibs as possible areas that the the market could roll over from. You know, so it's in this sort of zone we need to look out for up through there and it looks like the trend should should continue. Gold again, iron up a long term level. This time on this time it's support. It's the 1250. We had a hefty sell off in gold. The week before last. So now we're back down at this spike low and it's also the 1250 round number doesn't seem to be much of a bounce. But at the moment, you know, you can see on the short level that people keep the 1250 keeps getting defended. You know, this is it right here. You know, this is the first rebound that we got after after spiking low spiking lower than 1250. We never quite got above that spike high here. We did get above these highs. So you know, the fact that the the highs keep kind of drifting lower doesn't give me massive confidence. But the moment we're still seeing every time we get down somewhere in there, people buying up in this 78.6 worked on the one occasion. I think that was when we had a non thumb. No, it was kind of quite remember what's causing that large volatile day. But nonetheless, 1250 a big key area for gold. To me, the fact that we're the highs keep kind of drifting lower doesn't give me a lot of confidence is going to hold. So I'm not necessarily looking for that level to hold much longer. And I think we probably get another push down to this one 1208. You know, should that level give way, you know, look for the short term pullbacks to to to to ride that down here. There really isn't too much in the way of support between 1250 and sort of 1210. This is potentially $40 extra on the downside here. So yeah, I think that's that's it. I've not seen. Okay, Euro sterling, I will go over that. And we've got a few, few seconds left on the official recording, but I'll extend that a little bit. Obviously, you know, Euro sterling, more more being driven by by the pound than the Euro side of things at the moment, because the Euro had quite a decent sell off last week. But you're not really seeing that particularly reflected in Euro sterling, because you know, the sell off in the pound was just that much more dramatic. So a good pair to trade when you're trying to kind of avoid trading, you know, just the dollar and what the Fed are going to do this much more story on on the weakness in UK politics and the uncertainty. Obviously, today, if you read my morning note and Michael's morning note, been, you know, there's, there's lots of kind of political strife at the moment. Chancellor Philip Hammond apparently trying to urge us to, you know, to pay the into the EU budget and just to maintain that the EU passporting rights and put immigration on the back burner. Obviously, the people that were favoring Brexit, not such a fan of that idea. So there's a bit of a tussle going on inside government creates uncertainty. And you know, the pound is the is the whipping boy for that. So trend is clearly higher. But obviously, this the 90 level. And you know, the old time, not the old time. So the multi year high back at what was actually at 90, basically 91. It's a key levels that we're kind of kind of looking at here. But it's similar to the the sterling chart in that, you know, with that, you know, crazy sell off day that we had hard to kind of really pinpoint what levels to use. Now, if you use 92, because you know, again, who lots of in the FX market, it's not a centralized exchange. No one, you know, there's different interpretations as to what the high actually was. If you use 92 as a conservative high, then we're kind of pushing into a potential triangle top roundabout here. But I I wouldn't necessarily be too confident about selling into this pair just at the moment. You know, I think I think it's more a situation where, you know, you want to be buying on supports. So the obvious support number one would be down here at the kind of the bottom of this range that we've been since that big, that big buy up day. And if that gives away, then I think we're just looking at, you know, the the resistance pre that day. So they're two, two, two levels to look at there. Now, if we do get a breakthrough, this triangle, I'm getting a bit of a breakout. So then start looking for maybe pullbacks from the from the breakout. I hope that helps. Okay, well, good luck with trading this week, everyone. Yeah, watch out for the ECB midweek. We've got a lot of inflation data coming out for those trading the currencies. And, you know, keep an eye on this bond market sell off, particularly in the gilts. Because if that continues that could also could also weigh on equities, those those higher yields, reducing the attractiveness of stock markets and whenever there's a sharp sell off, that rattles investors a bit. So that'd be a reason for stocks to not to do so well. Thanks again, Jeff Lawler Sony out