 Hello and good afternoon and welcome to this Monday market webinar on Monday the 20th of February and this weekly look at the markets before I get started let's just quickly run a quick disclaimer for compliance purposes, a bit of housekeeping, make sure that all the eyes are dotted and the T's are crossed with respect to risk warnings and then we can get started on what thus far has been a fairly a fairly slow day first and foremost get rid of that then we'll talk about what to expect this week I'm not really expecting too much today with the US being off for President's Day holiday any questions on anything that I cover today please feel free to respond to that chat that chat message rather that I've that I've just sent a cross but I think I think the key question that I'm looking at for this week is are we going to get any breakouts from the ranges that we've been in over the course of the past few days and weeks and ultimately I don't expect that to happen I think when we're looking at trading the markets and I think this is particularly important I think if you're a day trader is will the markets break out of the range that they've been in over the course of the past few weeks and ultimately is it worth trying to preempt those any potential breakouts and the short answer to that is no markets have a tendency to range 60 70 75% of the time so sometimes a sensible option is to just play that range and ultimately I think that's probably the best way to play these markets because when I look at what's coming out towards over the last seven or eight days of February I'm struggling to see what's really going to drive markets out of the current range that they've been in the key stories that I'm looking at this week are obviously looking at the House of Lords the debate over article 50 will our law will our lordships look to try and pass any amendments to the bill that went through the House of Commons quite likely will they be successful quite likely not but ultimately I think what it will do is it will play into the uncertainty narrative that's really been dogging the performance of the pound over the course of the past few days and weeks we've also tomorrow got Mark Carney governor of the Bank of England testifying to the Treasury Select Committee over the contents of the recent quarterly inflation report and one of the questions that I would look to ask Mr. Carney is why the Bank of England feels it necessary to upgrade its growth forecasts twice in the last six months and not upgrade their inflation forecasts now the CPI numbers that we got last week came in slightly below expectations to one at 1.8% market was expecting 1.92% does that mean that we won't hit 2% over the course of the next couple of months no of course not because ultimately if we look at factory gate prices they're already trending at 20% per annum so I think it's unrealistic to expect that particular headline number in PPI not to trickle down into the headline CPI numbers and more importantly the retail prices which are at 2.6% well above the Bank of England's target rate so the big question is will Mark Carney have to send a have to send a letter to Philip Hammond trying to explain why the Bank of England's exceeding its inflation forecast of 2% I can probably give a straight answer to that question if you hadn't cut rates in August you probably wouldn't beat it by quite some distance but you know far be it from me to sort of bring my own views to the table what does it mean with respect to the dollar well with respect to the dollar index we are continuing to hold that key support area that I identified last week in my webinar which is round about this level through here around about 99.50 give or take 99.50 99.60 I still can't get away from the feeling that this is potentially shaping up to be a potential head and shoulders reversal and certainly given the hawkish chatter that we've heard over the course of the past week or so from Janet Yellen no less you know we've talked about she's talked about the potential for a rate hike and certainly I think there is an expectation that we will be getting one but if we look in particular at what Fed rate rise expectations are trading at at the moment the markets are assigning a 32% probability that we will see a Fed rate rise at the June meeting on the 15th of March now that's quite a way down from the peaks that we saw in the aftermath of Mrs Yellen's comments to lawmakers on Capitol Hill just under a week ago Wednesday and Thursday of last week this probability here was at 45% and now it's back at 32% so basically it's back at exactly the same place it was this time last week we spiked up to 45 we've come all the way back to 32 ultimately I think what the Fed wants to do is they want to keep their options open with respect to a Fed rate rise in March but I don't think they will actually do it so that feeds in again once again as to when can we expect to see a Fed rate rise now the minutes of the Fed meeting are due to be published in the aftermath of late on Wednesday night at 7 7 at 7 p.m. will those Fed minutes give us any further clues as to the timeline of a potential Fed rate rise ultimately no because they're dated we've heard from Janet Yellen since that Fed meeting we've also heard from a number of Fed policymakers about what they wish to do with respect to raising rates and ultimately I think the FOMC is split now later this week we've got a couple of Fed speakers in the form of Robert Kaplan of the Dallas Fed he is a new voting member of the FOMC this this year and his views I think will be important as will be Neil Kashkari of the Minneapolis Fed he will also be speaking later this week and I think until such times as we get a broad consensus as to what the Fed wants to do I think there is an awful lot of uncertainty as to the glide path certainly Stanley Fisher whose vice chair of the Fed has suggested that the outlook remains uncertain and while it remains uncertain I think it's unlikely that we'll get any further clues on the timeline of a Fed rate rise what I can say is that there are there is significant area of support on Euro dollar below 106 between 105 and a half and 106 and we continue to trade within this range that we've been in since the beginning of December with a top at 10850 a bottom around about 10350 but ultimately I think that it's going to be very very difficult for the for the Euro dollar to really trade anywhere out of the range that we've been in over the course of the past few weeks now why do I think that well you've only go really got a look at what's going on across the channel in France we've also got a Dutch election on the 15th of March as well as the same that's the same day as the March FOMC now the likelihood is there that they're going to find it very difficult to form a government particularly because Mr. Vilders is ahead in the polls and he will likely probably be the largest party but no one will want to form a coalition with him which ultimately will mean that any new government is going to find it very very difficult to really do anything there's also political risk in Italy same old story there as well could there be elections there quite possibly have they fixed their banks no so again the outlook remains uncertain and then of course you've got the French presidential elections the first vote is in April the final vote is in May and ultimately it remains significantly unclear as to who the next president will be ultimately the consensus for you is that it won't be marring the pen but the big question is who will it be will it be Emmanuel Macron he doesn't have a party machinery behind him so will he be a lame duck president because ultimately there will not be anyone in the French Parliament to be able to implement his manifesto of reforms by the same token the same applies to marring the pens so it's difficult to really argue for any significant move out of the range that we've been in with respect to euro-dollar so looking to sell it above 108 looking to buy in around about the 105 area I think that's pretty much the extent of it what about cable well cable has been very very resilient and I think it's likely to remain so we can see that from this daily chart here still finding a decent area of support below 124 every time we try and break below 124 we found a stream of steady buyers and you can see that that's born out in the very long shadows that we've been seeing in the daily candles on a regular if we look at what the pound did when it dropped below 124 in early February they closed quite significantly higher did the same thing again last week and it's done the same thing again at the beginning of this week so looking at this key level here I think if we close below the 50-day moving average and I think this is really I think the key level for me it's the 50-day moving average it's managed to acts on a fairly consistent basis since November it's actually to support and resistance in fairly equal measure and as such I think it's probably going to be a very key bellwether in terms of where we go to next does that mean that we're ultimately going to fall off a cliff now I don't think it means that at all because ultimately if we look at this move that we've that we've seen play out over the past six months the solid support 120 this big resistance of 128 the next move I think here will be either a significant move higher through 128 up to 136 or a very strong move lower now Deutsche Bank has suggested that we could see 105 110 on the pound against the dollar I don't buy that I don't buy that at all because ultimately I think it's not the US is already intimated or Donald Trump's administration is already intimated they don't want a strong dollar so they've been trying to draw bone the dollar lower the Fed is probably going to raise rates probably twice this year certainly I don't think it's going to raise rates three times and I think rising inflationary pressure will make sure that the Bank of England probably starts to dial up its forward inflation expectations in in the event that we see a significant rise in inflationary pressures so I'm certainly not dialing it I'm certainly not buying into the negative rhetoric that we're hearing out of out of a lot of commentators with respect to the pound against the dollar but I think a lot of the sterling direction will be dictated by how the dollar does over the course of the next few days and weeks which brings me on to euro sterling we've looked at this chart an awful lot and I talked about this in great detail last week the potential that this could well be building up to a head and shoulders top on euro sterling it looks much better if we look at it from a weekly chart and we can see that here with respect to this particular move here it's probably easier to look at it actually if you look at it in sterling euro terms it's certainly a lot less cluttered but it nonetheless gives you a fairly decent indication of how the price action is compressing so we've got this is sterling euro around one seventeen let's now take that out to the weekly chart it's a similar sort of story with respect to this inverse head and shoulders which obviously is the opposite to the euro sterling chart as well so one nineteen one twenty sterling euro naught point eighty three euro sterling so for me I think the bias here still remains to buy sterling on dips against the euro I think that could be a very significant that could be a very interesting move over the course of the next few days so certainly think with respect to euro sterling my bias would be to buy sterling on dips so euros on rallies with respect to that also being asked about dolly in so we look at dolly in that again is still in a range for me it's a topic at 115 but it's bid anywhere below 112 111 60 we can pretty much see that from here from this price compression here but what I would say is that my bias still remains to sell dolly in on rallies there's a huge amount of resistance between one one fourteen eighty and one fifteen thirty and anywhere between anywhere between that sort of area I think is a very it's a fairly decent opportunity to get short dolly in with a with a stop loss around above 115 and a half but again here I don't expect to see a significant break out of the range that we've been in over the course of the past few weeks one thing what I think one currency pair that could be interesting is Aussie dollar and the reason for that is pretty much what we're seeing here been in a huge sideways consolidation over the course of the past two years it's finding that seventy seven and a half area a really tough nut to crack we had a little bit of a spike through it last week but we weren't able to sustain it but certainly on the on the oscillator we are very overbought on the weekly chart a similar token we're also posting negative divergence on the daily chart but ultimately it's I think it's one of those trades that you're probably going to have to be fairly patient on with respect to any spikes higher but I certainly I think it's unlikely that the RBA will be raising rates anytime soon given where the Aussie is right now and also given concerns that maybe the Australian economy may be starting to slow down now we've seen a decent rebound in the copper price and iron ore prices over the course of the past few weeks and months and that obviously has helped the Aussie dollar now if those copper prices continue to rise then obviously that could have a significantly upward effect on the Aussie dollar and certainly I think when I'm looking at copper prices that does appear to have broken out but we're struggling to sustain that at the moment and I've been asked about copper prices and I'm going to look at that right now and we can see that we got that big breakout last week but since then we've drifted back down and come back below the previous resistance level so that is a bit of a worry but what we haven't done is we haven't taken out this trend line support from the lows that we saw in December but also the lows in November so I think while we're above this trend line here and while we're above the 50-day moving average copper prices have got potential to drift lower but ultimately while this trend line here remains intact then the momentum still favours a move higher in copper prices again an awful lot will depend on how the US dollar performs as well I think that will be a factor and obviously Chinese demand will obviously also tie into that certainly what we've seen from iron ore prices thus far would appear to suggest that they still remain fairly resilient so I think the latest figures for China trade data and China GDP and industrial production data could actually give us further clues as to the overall direction of copper prices the fact that this wasn't able to sustain the move higher is a bit of a worry for me and does suggest that potentially we could drift back down towards this line here which would mean that you know unless we break back above these highs here at 273 then maybe there's too many there's too much in the way of long positions and we could drift lower again so I think the fact that we've drifted back down here is a little bit of a worrying sign for me and potentially we'll probably will retest this line here and the 50-day moving average and then we'll see where we go when it reacts with respect to this line here gold prices been asked about gold prices and I got asked about these yesterday the last week and I think it was the same person who asked me and I still I still remain fairly bullish on gold despite the fact that we've hit on all we continue to remain fairly resilient in terms of equity prices and we managed we did manage to hold above this 1220 level which was was the previous highs in January and I think while we continue to remain above this 1220 levels and I think the direction of least resistance for gold is higher I really don't see the read I don't see any reason to really go aggressively short of gold until such times as we break below these two converging lines here this support resistance line from the 1220 level and the trend line from the lows that we've seen in December the oscillator is looking a little bit overbought but that doesn't mean it can't go any lower there is resistance above the February highs but ultimately I would expect as long as we hold above these lines here for gold prices continue to continue to age higher given the current level of uncertainty that we've seen over the course of the past past few days and weeks ultimately I think anyone expecting a breakout in gold prices I don't think it's going to happen I think we're going to continue to trade sideways but with a slightly upward bias let's have a quick look at silver and again it's a similar sort of story with silver again the trend here is gradually higher we could slip back down but one thing that I did or have noticed from this particular chart this daily chart here is that if we were going to sell off aggressively we wouldn't have these long shadows on the daily candles long shadows suggest to me that the markets worried about being short and if I'm looking at these long shadows here and here and here the market is never really really struggles to sustain moves lower so I think for me with respect to silver prices and less and I'm looking at this series of lows through here because that's three days in a row we've managed to stay above those lows 1775 then again the line of lethal resistance for silver is for this particular short-term trend to continue higher it probably looks better if we drill down into it this is one of those things that I always tend to do when I'm looking looking for an overall trend we can see it much better here on a short-term basis the trend is very much higher on an intraday basis for silver prices but ultimately it's one of those markets that tends to be a little bit too risky for my blood I have to say but ultimately as a directional indicator despite the fact that we are very overbought we can probably work that out by trading sideways within the range that we've been in over the course of the past week or so with a bottom of the range around about $17.50 and probably continue to edge higher back towards 18 and a half over the course of the next few days and weeks so that's that's silver prices now let's talk about yields because I think with yields yields are going to be particularly important in the context of where the dollar goes to next I think this is I think this is when looking at a 10-year yield chart will give us further clues as to the direction of the US dollar now this is a chart that I've looked at before at the moment we're trading sideways but at the moment the market is being the price action is being compressed on the 10-year US 10-year chart so looking at the 10-year chart just going to send a message to someone who's just twitched with something question here please I'm not very good at multitasking so I apologize for that and I'll go back to all attendees if we're able to hold above this trend line support here which is the line that I'm highlighting then or should I say if we break below this line here then the dollar is likely to weaken so I will be looking for the dollar to hold above this level here while this trend line remains intact if we break higher then there is a risk that the dollar could strengthen so at the moment we're trading sideways I would expect that to continue to be the case the biases for higher US yields but the big question for me is whether or not the federal raise rates in March I don't think it will wage growth continues to remain very very weak real wages last week were very disappointing and I think while wages remain weak the Fed will be reluctant to move they may be split when they meet in August but I don't think they'll vote to raise rates so looking at looking at this chart on a price chart basis we can look that look at that here if we break lower on prices then yields will inevitably rise if we break higher on prices then yields will inevitably fall but we can see there's a massive amount of resistance all the way through here in terms of prices and I think that 224 225 area on yields will be a tough nut to crack on the downside even if we do I don't see much in the way of downside for US yields anyway so for me I think we're probably going to trade continue to trade in that range with a slightly a slight upward bias but again even if US yields break higher that's not going to be the end of the world because ultimately it will also depend on what UK yields do and what German long-term yields do and I really don't expect them to sink significantly lower so it's really all about the differentials between the two and with UK inflation remaining fairly hot then ultimately I think that there will be a significant upward bias on UK yields as well and we can see that born out in terms of prices with this chart here though there is a slightly more downward bias there because we are pushing against resistance on the 10 year guilt right being asked about the ASX 200 topping out 5820 so let's have a quick look at that obviously this is also a little bit of a commodities play we can certainly see that born out oops sorry about that let me just blow that out here I think the problem you've got with the ASX 20 is because it's so close to the all-time highs that we've seen in 2015 it's going to be very very difficult to get any traction even on any moves higher you've also got the fact that the Australian dollar is actually quite strong and it's near of the top end of its recent range so those two factors combined are likely to keep a cap on it but even if we do break higher you've then got 5900 on the on the on the upside as well so I think it's really a question of what are your expectations for the RBA will the RBA be looking at raising rates I don't think that's likely so that could in the marge in the main be supportive big question then is what happens with commodity prices copper prices and I know prices given how that copper break out petered out that does appear to suggest to me that there is significant resistance around about 5820 and as such you've got to look at what are the drivers that are going to send it towards 5900 and ultimately I don't see where those drivers are going to come from so on that basis alone I would be very reluctant to be overly long the ASX 200 at these sorts of levels certainly the smart trade if you're looking in terms of risk reward and I always work on that basis is that if I'm looking to make any any money the risk reward would appear to suggest that the short trade is the smart trade and you put your stop loss above 5830 5840 on any put on any on any position that you're putting on because ultimately where we come from in 2017 5600 where are we in relation to the all-time highs we're quite close to them and for me that the short trade is probably the more sensible trade in terms of it's easier to calculate where to put your loss relative to where we are now now that could well be wrong but at least I've got clearly defined idea of what my downside is relative to my upside and it's all about percentages when you're looking at trading a particular market and certainly looking in the context of the ASX 200 there'll always be some reason as to why it doesn't want to go higher it could be the Australian dollar goes towards 75 goes towards 80 that could act as a drag because essentially it makes Australian export as much less competitive so there are any number of reasons as to why the ASX 200 won't go higher that being said I don't expect it to fall off a cliff either we're in a range we can define that range pretty much from where we are now certainly it certainly it certainly looks an awful lot more what I would call clear cut when we look at these doji's here there's two doji's here one on Thursday one on Friday today we've had a slightly negative day and that for me suggests that the momentum simply isn't there for us to go higher when I look at what's out today in terms of Chinese data there's really not that much to suggest that we could have a catalyst to push it higher and the oscillator is looking very overbore so certainly certainly in the context of where we've been I don't expect to break out on the ASX 200 same really applies to the FTSE 100 looking at the FTSE 100 here we can see straight away on the daily that I think it's going to be very difficult to get back above the highs that we saw last week if we look at the weekly I talked about this last week we had a bearish weekly reversal in early 2000 and in the early part of this year now we have slowly started to edge back towards it and certainly I think there is a I think if the pound against the dollar slips below 124 again stays there then that could push the FTSE 100 up and potentially retest the highs but given that a weaker pound goes against my overall FX view then ultimately I don't see what will drive the FTSE back towards the highs that we saw at the beginning of the month the FTSE 100 is very much a currency view as well as an overall view the economic data has been fairly good an awful lot of what we've seen thus far in the global economy has been fairly positive and certainly I think that feeds into the narrative but again I think you know we are still in and one will continue to be in an overall range and the top of the range on the FTSE 100 is probably going to be in the mid 7300s the bottom around about 7200 with major support 7105 I think we that I think if we look at the foot if we look at the DAX it's even more clear good we've got good solid support around about the 7000 7000 the 11700 level we saw that through the early part of last week but again you know it's pretty it's pretty uninspiring stuff ladies and gents it's pretty much range bound stuff there's a nice big area of resistance near 11900 now you can argue that German equities of what I would call a bit of a safe haven trade certainly that that would make sense but again there's no momentum in any of this stuff we're trading in a range and I think it's likely that we will continue to be so I will only I will only really tear that argument up if we if we break above 11900 given what's happening in France it's a harder argument to make if we look at the cacarón there's still a big resistance level around about 4930 4950 if we take it out all the way further even at 5000 we've got a whole host of resistance levels all the way through there so again on the weekly chart good support lower down but again this political uncertainty is is proof you know it's keeping people on the sidelines and ultimately given what's happening in France right now you've got to be a little bit reluctant to be investing in French equity so again it's about playing the range taking taking small amounts of profit every single time not looking for the big move you know taking the money that's on the table at the time and not looking for very very big moves one way or the other markets break out and trend around about 25 30% of the time the rest of the time they range so it's important to when you're trading the markets is to manage that accordingly if you do catch a breakout good stuff but ultimately 70% of the time you'll be just picking hopefully picking up pocket pockets of money and aggregating your profits on a gradual basis okay so I've looked at copper I've looked to haven't looked at crude so let's have a quick look at crude oil and again it's a similar sort of story here we talked about this last week and once again top end of the range near $57 a barrel bottom end of the range around about 53 so we're in a $4 range it you know it's not there is no evidence here whatsoever that we're gearing up for a breakout the rig counts are still increasing for US shale producers and that is likely to keep the oil market in surplus and that for me despite the OPEC cuts that we've seen from Saudi and from countries like Iraq when you've got US shale producers continuing to ramp up rig counts you've seen the rise in inventory data that is likely to keep oil prices at the upper end of their recent range I would be very surprised if we break higher and even if we do the prospect of the fact that we could see a significant move to $60 is offset by the fact that an awful lot of people along the oil market so they won't want to I think run the risk of pushing the market letting the market run too aggressively higher other other other things to keep an eye out for this week are UK banks four-year earnings particular chart that I've got my eye on is Barclays why because look where we are with respect to the big big resistance level that we're seeing on Barclays share price at the moment 240 240 250 big big resistance there if Barclays results disappoint then we could well see a move back down towards the lows that we saw in December and the end of January looking at Lloyd's lot of lot of good a lot of good news I think is priced in with respect to UK banks but of all the banks I'm looking at here Lloyd's Bank is probably the one that is in a fairly decent uptrend again we could we're still well below the pre-Brexit peaks whereas with Barclays we've gone back above them and then of course you've got the perennial problem child of RBS their results are out on Friday they're likely to be disappointing again look just back just got back above the the pre-Brexit peaks but look at this area of resistance on RBS here big big resistance all the way through here so it'll be very very interesting to see how the market performs over the course of the next few days will those results on Friday propel us through 260 big big inflection point on RBS certainly worth keeping an eye out on that particular chart okay ladies and gents I think you're half hours up so if you have any other questions please feel free to direct them to me now either that or tweet me at mHusen underscore CMC otherwise I'll wrap this this this weekly update up and I'll see you all the same time same place next Monday