 Hello everyone. Welcome to this weekly charting analysis, the first one for 2015. My name's Jasper Lawler, a Mark Analyst here at CMC Markets, and the webinar is going to be about half an hour looking through some of the important charts, patterns and levels alongside some of the fundamental drivers for the week in terms of the main asset classes that we trade here. Any kind of questions at all, feel free to send them through to the chat or Q&A boxes, and I'll get to them as soon as I can. So it's, like I said, the first major trading week of the year. Some of you keener members out there might have been trading on Friday. It was obviously the first trading day, but really this is when it all kind of kicks into gear again. And it is a non-farm payrolls week for those of you who trade currencies especially, but also the U.S. markets, and obviously it just affects all the global markets. We had quite a blowout in the last number and subsequently had a pretty blowout U.S. GDP number. So it's certainly going to be an interesting one. And by the by is that we have our non-farm payrolls webinar going this Friday covering the whole event live. I'll mention a bit more details towards the end. The big one overnight though has not been so much U.S. oriented, but over here in Europe, those of you following the Euro will have seen that it's crashed down below 120 and now hit nine year lows right down around the 118 mark. It's pulled back a bit since. But just interesting to have a look at this chart which I think has been referenced. On the chart forum a few times here, but it's the 200 month SMA on the Euro-U.S. dollar and the rising trend line, both of which have been broken, which is quite significant because that's been holding up prices like I said for about nine years now. So that's quite a big technical deal. So everyone's been talking about the prospect of quantitative easing from the ECB for a while. Also there's just a weak European economy as reasons for a decline in Euro. But to get through these levels is showing kind of an extra level of enthusiasm if you like for selling the Euro. And obviously these Greek upcoming elections are not helping the issue. So yeah, this is quite big. So where the market closes this week and then this month will be big. Even if it closed around current levels it would still be pretty significant. It would be a definite technical breakdown. And we can see just on the shorter term chart, but on the daily chart, we're in this kind of consolidation phase, but mid-November we're pretty much trading out of it and then just these last few trading days. The last, you know, over the weekend it was Mario Draghi with the usual sort of jaw-boning of the currency and the prospect for quantitative easing that sends it lower. You know, that alongside the latest failed Greek presidential election which is leading through to a snap general election which a lot of people are expecting to be won by sort of a disruptive anti-asterity, anti-current EU-type measures party which could result in Greece leaving or getting chucked out of even the Eurozone, which is obviously kind of disruptive. So you know, so this is a fairly clear-cut trend right now and it's way below these daily moving averages and when you've got an accelerating trend like that, you know, if you're trying to catch this wave a bit late on at this point but still, you know, you want to ride the trend and you've probably got a shot drop down to the shorter time frames and already a couple of times the price has failed to even get back to 120, that key breakdown level. But nevertheless we saw quite a strong reversal off the overnight lows. There's still a bit of a prospect for a bounce back perhaps towards this MSMA but you can see it's accelerated away but maybe, you know, that was the last kind of desolation down and you just sort of kind of steadily wound down until the next drop so we could see another one of those. So if that is to be believed then probably we're not even getting above these highs again around 1975. Should we get above those again? Then that's when there's a bit more of an opportunity to perhaps sell at higher prices. A notable one would just be that former kind of consolidation area here which is probably better. I've done a horizontal line and a declining trend line. I think the declining trend line probably fits at the best and so it'd be somewhere along those lines. I think that's probably the best. Only a couple of touches but you can see it kind of was broke and retested there. So should we get a move above here then we could be looking up here but really obviously the trend is down. Worth also while we're looking at the Euro, worth having a look at the Euro Swiss because obviously the other big move that's happened in central banks happened late last year was the move by the Swiss National Bank to go to negative interest rates. So that's the kind of volatility that you can expect based on this kind of movement. I don't know if that is probably not a great example for me to be sharing you right now. That doesn't look quite right. Nevertheless, this was the move after the announcement at the negative rates and as you can see, it's moved the Euro Swiss right out of that kind of 120 handle that the Swiss National Bank have pegged against the Swiss franc. So that's one to keep an eye on and the subsequent meetings from the SMB, obviously we don't have one just anytime soon but certainly that's going to be interesting in relation to how likely it becomes that the ECB engaged in QE because that really, even though the Swiss National Bank kind of in a sort of side manner blamed the crisis of Russia for the increased currency flows into a safe country like Switzerland, really it's the Euro getting sold off on the potential debatement that would come from QE that's their biggest threat. So the more QE becomes likely from the ECB, the Swiss National Bank may even have to engage in a similar program themselves which they wouldn't be able to match in size but the peg against the 120 is going to have to get more vigorously defended and the negative rate's been enough for now but whether it can keep going is a different question. What would be the fundamental drivers for the Euro going forward? On the 7th of December, which is Wednesday, we have the flash CPI, the first release of the Eurozone CPI and there are some calls for that to go officially into deflation which is obviously what's been trying to be avoided this whole time and the ECB have been, throughout have been saying that there is no risk of deflation just prolonged low inflation and that's enough for them to act or now we're actually getting to genuine deflation. Not only are there new allies, not over the last year but month to month it's going to turn negative which is not a good thing certainly. It damages confidence in businesses to be able to invest in the future if they think that the prices that they're eventually going to be the other self are coming down. Stable prices are really ideal, don't want runaway prices certainly don't want really falling prices. Another sort of European event later in the week there's a few industrial production numbers but really has been normal it's the German one that counts so that one will be worth watching but really in terms of trading the Euro it's just all about the ECB, comments from the ECB members and the fundamental data that's going to drive it which is i.e. inflation and with oil prices acting the way they are down another 3% today as you can see on the platform gamma is actually crushed, that affects inflation. It doesn't affect core inflation which obviously strips out food and energy prices but that's not actually how the ECB gauge their policy. So if we have a quick look at oil prices now I've got WTI up in my screen which I follow the most. So this was the kind of the great white hope here was that actually 55 could prove the level needed to hold up WTI but as you can see it just didn't actually, this is a four hour chart couldn't even get above the 55 period average on the four hour chart and eventually it just fell below, retested that line a couple of times and the moving average and we'll drop it back again and 50 dollar oil is looking like an imminent prospect for WTI. So any pull backs you know we could look at just that form of consolidation area and again you've got to look at pretty short term charts to kind of deal in this stuff. You know it's which one of these lows they obviously they don't quite correspond this would be I mean down here this level's already been that's what we tested here moving lower again so that may be as good as we get but you know higher price this is obviously the better price that you're going to get this is a more aggressive entry down here. Keep in mind this moving average which has worked fairly consistently is a source of resistance so if you're going off that it might be closer to this by the time prices get up there the average is probably going to be in that vicinity and then you know shock on a moving average so that looks around not probably 50, let's have a look I think it's quite 50%, it's probably maybe the 38, yeah it's in between the two so that would be you know an area for pulling on retracement obviously the momentum's down so if you're trading on a break of lows there should be a few opportunities coming up as we trend lower. For rent that's just crossed below 55 for the first time today not the first time obviously but in terms of multiple, in terms of recent history this is the larger chart I pull up every now and then and you know do this line and we'll back up it here and literally just a couple of weeks later we're actually looking at testing this trend line now it's only had two prior tests but this is a monthly chart so it does have a good amount of significance to it so that's where we're getting into now and it does correspond with this sort of the consolidation area here where we had a few spike lows and then eventually broke lower from that so if we're not to get to the lows at $35 a barrel which obviously took place during a financial crisis which you know even though global demand is slowing right now and obviously production is increasing we're not in a financial crisis so you wouldn't think we're getting to $35 a barrel but you know that's certainly possible the Saudi oil minister has said that they're absolutely fine increasing or maintaining their production levels at $20 per barrel so you know the intentions within OPEC are to you know just let prices drop and flush out the US producers and run them out of business and then you know maintain their market share and eventually prices will correct itself peak oil will come back in and you know we'll see higher prices again but you know we've got an interesting level coming up in that again kind of corresponds with the $55ish and $50 in Brent, the global benchmark for oil so we've got a bit currencies and commodities first since we are doing that we're just going to touch on sterling that also touched 17 month lows I believe and so you can see that this is a weekly chart so these are the kind of big level stories obviously you have in mind you don't necessarily have them drawn in but if you just check back to them every now and then which is kind of what I was doing here this was big three touches back in 2012 and before and that's where we're kind of putting off a bit at the moment but you know if we can't hold this then obviously these are you know this is the obvious target would be this sort of I'm using the first low here but you could use the bottom but it's certainly in that $148 type of currency with obviously the round number of $150 just above it but again the trend is very much down with weak construction data today that's not the be all and end all but it's worth noting that just on that kind of housing side of things the housing sector was a big driver of the recovery and you know the pound was the reason for this big move higher in the pound was just because the UK was the best performing economy in the G7 and going great guns outstripping growth in America until recently but the sort of political unrest associated with the Scottish referendum and the likes and now the general election where the results are very much uncertain and also what I was just about to get at was the house prices were soaring and now they're coming off and the housing sector was important to the UK recovery one in terms of the sort of wealth effect associated with just having a higher valued house and being able to revalue, you know, reduce your mortgage to lower interest rates gives you a bit more money in your pocket and just the employment that it gave to estate agents and to the building trade was a big boost so house prices have been coming down for a few months mortgage applications have been down multiple months and now construction for at least one month has been turning lower so that's a factor short term basis so that's the long term level that I had drawn in there but here's our kind of consolidation area that we were in this was the low you see we kind of break down touch touch again, it's a sideways consolidation that's the low we dip a bit below these things are not perfect but you can see generally what we're dealing with here is that downtrend we move into a sideways consolidation dip below it retest now we just fall off a cliff so if you benefit a hindsight if you had to shade at the former low there the bottom of the range that's point perfect not point perfect but it's all you need and it's holding below that moving average and it hasn't even got close to the 55 day and you can see here just as a note on the RSI not got above the 50 for quite a while since basically the end of the uptrend so that four hour RSI 50 levels proving quite a significant area of resistance just want to keep an eye on if you are going to go long cable for the big reversal of this trend you know you obviously can buy into falling prices or you can wait for a bit of a confirmation one of which would be a move above the 50 sorry I'm talking about four hours it's the daily RSI in this daily RSI is obviously cap to the prices if a move back above the 50 in the daily RSI would be to me one of the signposts that the trend is reversing but for now it's very much down and obviously just a matter of picking your spots this is going to be quite a big pullback at this point back to here obviously it's a fairly conservative entry you know your risk is above here or above there but the move essentially has already happened if you like then the opportunities have kind of been missed for this so then we're waiting for the next sideways move for the next one if indeed it does happen back to commodities again just one currency and commodities this is gold you know gold you know it's kind of really the reason for the big rally was the potential for hyperinflation people protecting their assets financial crisis people winter safety obviously stock market is booming going on six years now there's really not much need for gold when all your other assets are doing so well so gold prices have come down accordingly but another correlation not just one correlation with gold is the stock market stock market goes up gold tends to come down the other correlation is gold with the Fed and ECB balance sheets was the Fed that really kicked off the fear of inflation that helped gold prices but actually in the latter stages it was more related to the ECB and there the we've posted charts and I think Colin has quite recently analyst in Canada a chart relating the ECB balance sheets to the price of gold and there's a strong correlation there so if the ECB I mean a lot of what's going to happen this year does rest on what the ECB does so if the ECB do engage in some sovereign asset purchases really expand their balance sheet that's money being printed right there and in a time of money printing people will go to gold at least they have done in the past so that goes some way to explain why we've got this 1800 level we weren't crashing through it went right down to it doesn't look like it on this longer term chart in terms of some of the moves that we've had it nevertheless was a 50-80 dollar move if you look on the short term charts but we just didn't get that we know we've gotten to just above 1130 and we've pulled back way above 120 and we're back at this key 180 kind of level so here you think okay it's been broken but really you look at the longer term chart it's not especially being broken here's the weekly chart and the monthly do we even get a close below there you barely did we did but this is not the most solid break this is really what we're talking about here the flag on the monthly charts and they're what count and this candle was pretty disruptive to this being a big breakout it certainly still could happen if we're looking at sort of an ABC BC kind of correction it's very simplified or just a bare flag bare pendant you'd be looking at down here it's 800 dollar I've done a video on this previously on the protection of gold and I think I had around 600 as a potential price target see I'm not banking on that at this point but it's a pattern that's worth considering but if the ECB engage in QE my tendency to believe is that that's going to be supportive of gold even though you'd think that it's a more bullish case for the US dollar and obviously that is a counterpoint but gold against the euro certainly is going to improve and I think even if it's a US dollar so back over to equity markets just have a look at the UK100 so here's the short-term level that we've just kind of broken through but to give that a bit of context this is really the line that I had it genuinely had in and that's what we've come off it's not rocket science here this was the sort of head and shoulders type double top that saw us fall right down to just short of the low the previous low and that was a big level to break through we'll come back and that's what we'll come back off and because this was such a big rally higher on this daily chart there's barely a pullback to use as a sort of potential area of support so on the daily chart there wasn't much to go by all you really had was the low that was formed there this kind of high breakout area and we've moved below that low as of today so that's kind of a bearish development hit the EMA boom close right below it for the four hour if we close below here for the day it's a bit ominous and I would say we're probably moving back to this head and shoulders type neckline that caused us to break higher in December it's a couple of times now it's like say if you want to see strength in the market what do you look for taking out the highs rally didn't take out the highs rally didn't take out the highs each time we're making progressively lower highs here and admittedly the lows are not it's kind of a higher low there arguably as well obviously that's not but it's a kind of bearish outlook bearish sort of infused sideways market that we're looking at at the moment and if we treat this moving average as something significant or any kind of trend line you want to do through there we've had this rising kind of wedge type pattern big breakdown big rally and retest big collapse attempt to come back so this 6100 slash 6000 levels it's going to be huge if that breaks because that all kind of puts into place as a kind of breakdown but for the moment we're in sideways trading but a breakthrough those to me is significant let's keep it in Europe for now we've got the Germany 30 similar looking thing I think the 4R is a bit more instructive but again this is the kind of where we've broken down it's obviously looking a bit more positive in Germany and this again relates to that good old story about the ECB Germany's economy it's certainly one of the stronger in Europe practically always will be but it obviously saw a rough patch it's kind of pulled back a little bit it's still fighting deflation alongside the rest of Europe it's got record low unemployment and you've got to believe based on the economic data in Germany there's not going to be much incentive for them to go along with a QE program especially given their history of inflation in Germany it's embedded in their minds not to do this kind of QE type program so if it does go ahead it looks like it's going to go ahead without the consent of the Germans without consensus but even though the German government and arguably the German economy could do without QE the German markets are certainly looking for it and that's why you say in the strength of the DAX last year the DAX closed up 2% odd the FTSE was down 3% odd that relative performance is largely due to the upcoming QE in Europe versus the wind down and potential a great hike in the UK so again not taking out the highs recently here but did previously did make all-time highs above 10,000 again so more of a potential for just a little small back and jump back here this is a very indecisive candle on Friday but that's kind of choppy poor liquidity holiday trading so not much to be garnered from that really probably back down to this chart and whether we can take out these lows which you can see have been when you see two points like that right off the same area you know that level is significant below there that's the kind of breakout point going down towards these lows you know if you're looking for correlation between the Germany, the FTSE you would argue that the Germany, the FTSE is about to roll over but you know still I would argue the trend is generally higher you know the bias would be towards higher and you know this is the bottom end of the zone for the current trading market in terms of this is the current price range so if you're expecting prices to remain this is obviously the bottom end if you're sideways trading you buy in the bottom end you sell in the top end so just to finish off with US 30 and the SPX just worth noting I don't think this is necessarily going to play out but there is you know largely this is largely relating to the fact that we just had this such extended rally that the investors did get very overbought and now obviously this latest rally which made a new high in prices did not make a new high in RSI so I'm fairly I think it's probably not going to particularly play out I mean it has obviously already sparked a correction I don't know if it's going to go much lower towards 17-4 30 would be the next level for me to be keeping my eye out on if not the moving average but it didn't plow down too well on the last correction but what I think is a weak sign is that okay it didn't make up these previously overbought levels but it didn't even get to 70 before rolling over which is they generally accept overbought level for RSI so that's the negative the bearish divergence alongside not getting into an overbought area before pullback to me is definitely some bearish signs so if you see another kind of jump and then another roll over that would be some extra confirmation because then you would actually be literally getting the failure to make a new price high as well as the RSI but counter that to that somewhat is you actually see a bit of a on the shorter time frame you see I mean the same exact kind of I mean I've just used two different charts to paint the same picture really but you know same kind of bearish divergence here on the daily chart but worth noting on the four hour chart is actually quite a good little potential double bottom in RSI alongside falling prices you know with quite a big couple with a kind of large wick candle there which we haven't really got below since so I think if we maybe you can just get below these these levels here 255 or 2062 that would be the kind of break point to confirm this little double bottom pattern here with the divergence and obviously it's taking place alongside the 38.2 should this little bullish pattern not play out we are seeing a significant divergent confluence of indicators here the 61.8% retracement of the Fibonacci alongside this high from the 16th of December could make for an area of demand should prices drop again so that only leaves me to quickly go over running over a little bit here but quickly to mention again that we do have the non-farm payrolls coming up on this Friday you know we had a big number last time big GDP result there nevertheless the expectations for significantly smaller number 241k is the expectation whereas last time we obviously had 321 so expected to be a bit of a slow down for December but you know a lot of that kind of relates to the kind of hiring that goes into the holiday season around Thanksgiving and around December and then once you're actually into something you don't need to hire anymore so it's a bit of a seasonal thing overall the picture is pretty good you know that if the number is below expectations it will definitely kind of not pull the rug under but remove a bit of the excitement that came in from that strong number last time in the strong US GDP okay not seeing any questions here so thanks a lot all for attending and should you want to watch this again or pass it over to friends or colleagues it will be available on YouTube later today and we'll post that on Insights thanks a lot Jasper for signing off good luck trading