The Trading Week Ahead: 4th-8th March 2019

Okay, very good morning. It is Monday, 4th of March. Hope you had a good weekend. Going to do our usual kind of Monday look ahead, looking at the entirety of the week, and then I'll hand you over to, to Sam, and he can look over the charts from a slightly bigger top-level kind of oversight of some key levels maybe to look at over the coming trading sessions. For any of those who did or didn't We do— myself now do a session on a Sunday, more often or not. So if you wanted to utilize some time, or maybe on a Sunday afternoon if you have some downtime, then what I did yesterday is I recorded a live session that I did, and that will be available on our YouTube channel. Just search for Amplifier Trading. All you need to do is subscribe to the channel and hit the notification bell, and regardless of whether you see that broadcast live or not, you will get basically ability to be able to watch the recording anyway. So yeah, we're going to be doing that from going forward. I know a couple of you did join us, so thanks for, for taking part in the session. But just for those who didn't, going forward. All right, let's get down into what is going on at the moment. So a couple of things are moving right now as I'm speaking. So I know a few of you might be in trades already. So EURUSD just under a little bit of pressure here, top left corner, just breaking through some of the recent range that we've had, what would have been the back end of this of last week. So a little bit of downside coming through and looks to be— well, the dollar index is now trading up through what looked like highs that were seen very early on, or I could say during the Asia-Pacific session. So we're up about 1/10 now in the Dixie Cable pretty static though, uh, so possibly maybe a little bit of euro technical breach. We'll get into some of the headlines because we've got the ECB of course coming out later this week and we can discuss that as well. Otherwise, you can see in the center charts you've got the DAX future, NASDAQ, and the S&P. And you can see in the US indices, Europe the same, a gap up in the reopening of electronic trade overnight. Again, I'm not going to dwell on the charts from a technical perspective because I'll leave that for, for Sam to do. But the longer term, obviously, S&P picture here, of course, being that key level that we are watching on the retest on that trend line from the end of last year. And obviously we gapped up again having closed above that level on Friday, and so challenging up at around levels from that of December high. So we'll look at that trade war headline that came very late yesterday, late afternoon, early evening, helping lift some of that sentiment overnight. And consequently, China did trade a positive performance at the Asia-Pacific session. Interestingly though, from a DAX perspective, any relief on progress on that side has been decidedly short-lived, and we've already closed the gap and in fact just move back down to find some support or pivot at this present point in time. So let's, let's get into some of the news then and have a look at what's on the agenda for the week. And well, I won't go through this line by line completely. I'm just going to pick out some singular events I think you guys should be aware of, and then we can talk about some individual related stories as well that go along this— things like Brexit, of course, and also the trade war update. So in terms of today's session, it very is, or very much is, a digestion of that report which did come out overnight. So let's jump immediately to that. And this was in the Wall Street Journal, where US and China are close to a trade deal that may end American tariffs. So it's quite interesting actually, if you remember the last article that came out when Trump tweeted was 1 hour before Globex electronic trade reopened on a Sunday, and that was when he said the talks have broken down. Now it came a few hours before, and it's the opposite. Now talks are going positive, and this is kind of the next evolution of kind of progress, if you like, on this situation. So we've had a meaningful positive response in markets. I would say, and Sam might have to toss me the Trump hat, because Again, I think this is absolutely textbook timing because there's something happening in China this week, and that is their National Party Congress. This is a meeting that they have to kind of discuss and set high-level policy in China. And guess what? That starts today and it lasts all week and lasts around 10 days in total. But this is the most important parliamentary gathering that you see in China on a yearly basis, and Trump tweets just the day before that gets underway about how they're making some concessions, they want to get to a point where they can sign a deal off. So again, as much as you think that this is quite erratic the way this has gone, I do think that there is some intention timing-wise to do this at the right time. For those who are not familiar, I know this infographic is particularly small, but I'll share the link afterwards for anyone who's interested. I often get a lot of questions about the Chinese power structure, if you like, because it is quite, quite different from what we're used to in a Western democracy. And here you've got the General Secretary and the all-main-consuming power, which is right at the top in the hands of Xi Jinping. You then have this senior of what's called the Politburo Standing Committee, This is something like with the Bank of England, with the MPC, for example, or the FOMC in the US. For Chinese government, you have what's called the PSC, the Politburo Standing Committee. Now these guys really, like, when it comes to China and what China is doing economically, foreign affairs, and everything in between, it's really concentrated within this small cluster of people, and obviously feeding into Xi. Where the balance of power lies. So I won't go into this in too much detail about the subsectioning and who's in charge of what, but if you ever did want a crib sheet of all the relevant names for, for what, given how important the trade war is for global markets, it's not a bad thing to just have a glance at and get familiar with a couple of the names so you can be, if the, the situation ever arose, a bit more responsive to interpretation of news. If it's one of these other Politburo members outside of the more familiar ones that make a comment. So yeah, that's probably the, the big story for Monday because from an economic calendar point of view it is pretty quiet. There's not a great deal going on. UK construction PMI, I mean, that's a bit of a moot point. The other thing we're looking at from the UK economic data calendar really from this week is the service PMI, and that's going to come tomorrow on Tuesday. On that point, looking at Tuesday, that kicks off, commences what is a central bank decision week. You've got the RBA which will be coming tonight, you've then got the BoC on Wednesday, and you've got the ECB on Thursday, which is going to be the one that we're going to be focusing on the most. On that note, let's have a look at what to expect from the ECB. And this was just a graphic that I pulled out from a Bloomberg Economist survey from the weekend. Well, it was compiled the prior week but released at the weekend. And what we're looking at here is that this— if you're, if you're breaking it down into its parts, obviously it's a two-part event. You have the initial interest rate decision and the, and the statement that accompanies that at 12:45. Then you have the press conference at 1:30. Now, the additional factor that you get in this week's ECB meeting is that, much like the Fed on those quarterly ones or the quarterly inflation report from the Bank of England, the ECB are releasing their staff projections. Now, what this means is they give you information about their kind of medium-term horizon view for growth and inflation, which is obviously very important to see what their uh, consequent monetary policy could be going forward. Now, the interest rate statement as it exists at the moment is that they're going to keep rates on hold at least through the summer or as long as needed. Um, but one-third of those surveyed by Bloomberg— these are bank economists— predict it will alter its guidance to signal a later liftoff. Um, we're not expecting that to happen as soon as this meeting, but ultimately, just given the economic situation, political stresses in individual countries within Europe, you know, it's looking very unlikely that the ECB is going to be able to execute a rate hike. Also layering in the fact that Draghi's term comes to an end, so you're going to have a transition in the president role, and the markets are priced well into 2020 for the next rate hike. So what is it that we are looking at? Well, from a European perspective, is going to be these projections and how downbeat have they become. Because the last time that we had these projections was in December, that's the purple bar that you can see. And you can see the Economist survey and the Bloomberg Economics expectation then of what they're looking for is quite significant downgrades. So how the currency might react definitely is going to be a reaction effect of the pessimism or not that we see on the growth and inflation front. And on that note, the euro is seeing a bit of weakness at the moment. And as that looks like it's just giving the dollar a little bit of a lift, keep an eye on gold. That's also session lows now. Let me just bring the charts back over. Gold just breaching the low point that was seen would have been the back end of last week, down about $10 already this morning. And obviously gold, maybe a little bit of an unwind of some of that that flight to quality bid. And then we had the trendline break, of course, you remember from last week. And so technically, obviously, now we, we've gone through some significant downside support levels, uh, the trendline, the 1300. That all went in very quick fashion on Friday. And so now does open up the prospects of potentially some further downside in the near term. Again, I'll let Sam go over that and his thoughts on targets potentially outside the ECB. Back to the, the calendar for a second. Um, Wednesday you start to get a bit of a build-up then for the non-farm payroll release on Friday. Now you'll notice that with non-farm payrolls, if you, if you listen to the briefing on Sunday or if you're listening now Not going to spend a lot of time talking about nonfarm payrolls because I don't really think it's that warranted, to be quite frank. I think if you have a job number in line with expectations around 180, unemployment at 3.9, the wage data, I think largely is the whole report in itself is not going to be particularly influential to really shift the needle from where we are and how the markets are priced in terms of Federal Reserve policy at this point. So of course the employment data does create short-term intraday volatility. What I'm saying is, from stepping out of that environment and looking at the broader picture, I don't think it's going to be particularly too much of a game changer. Um, payrolls of course being on the 8th, so one exception then, as we discussed, being delayed, uh, given the, the, the first of the month was a Friday in that respect. So time to gather the data and so on. ADP then, that means you're going to get on Wednesday, and you get the various ISM indicators as well. So maybe an eye on the job constituents of those major reports to give you a bit of a better insight as to how the, the BLS report will come out from the government on Friday. From a US data point of view, the ISM Non-Manufacturing PMI I think is potentially quite interesting. The reason for that is because of the recent deterioration that we've had within US economic data, particularly that really quite catastrophically bad retail sales number we printed, uh, what, 2 weeks ago now. So be interested to see how the non-manufacturing PMI numbers are holding up, and that will be on Tuesday. Otherwise, going through the rest of the week, let's just run through the stories because, as I said, there's not a lot of UK economic data coming out but there is quite a lot of Brexit-related updates to make you aware of. One thing to be clear here, there's political updates, but there is zero movement in the pound this morning. So just to make that upfront statement, there's a big difference here between, I think, what the markets have kind of bedded in to what could then create a market move. And I think a lot of the news is more updates than it is anything really groundbreaking kind of development. So let me give you a quick summary of what's happened over the weekend. So the pro-Brexit hardliners of the Conservative Party in the Sunday Times at the weekend have basically thrown their support behind Theresa May. Now, this isn't really new, this was something we had last week, but it's been re-emphasized in press, this being the fact that the Brexiteers, i.e., the ERG members, Jacob Rees-Mogg and co., would rather accept May's deal with some slight tweaks on the backstop issue than have the— or run the gauntlet and the risk then that we go down the route of no Brexit at all. Better to have something watered down than just no Brexit. So that's kind of a repetition, if you like, hence the reason why the market's not really moving. There's nothing too new there. The other thing was in the Mail, the Mail on Sunday. Brady said the country is basically tired of vacillation and delay. To be honest, you know, this is— I know I shouldn't bring my own personal view into this, but I really hate it when politicians use words like that. I mean, that, that just goes to show how out of touch they are. I'm sorry. But I mean, or is it just me? Is my vocabulary just particularly bad? But, uh, there you go. But Brady said that basically the country is getting tired of this, this, this kind of circus that's Brexit, the lack of progression, and urges colleagues to pull behind the Prime Minister and help her to deliver our exit from the European Union. So again, someone of significance throwing their weight in a similar fashion to behind the ERG This is all very positive for the prospects of an orderly Brexit. And actually, if Stephen Barclay, the Brexit Secretary, and the Attorney General Geoffrey Cox can deliver on the technicality side, the legal binding nature of the backstop, well, guess what? You've got yourself a May deal on the cards. And then that gets forwarded through, sign-off then comes for potentially the kind of regulatory delay in order for it to get all parliamentary approvals, and then we move into transition. So could be quite positive that way. The other side of this is, well, if we eradicate the no deal, that also could be quite positive. So a couple of different things going on here. The other thing, and the final thing from the weekend, is Labour opposition have shifted position now and support a second referendum. But if you read the weekend's press, there's, there's a large number of Labour politicians who are incredibly unhappy. Don't forget, Labour in itself is quite split. Split enough, in fact, that it splintered into partly an independent centrist group under now Chuka Umunna, to all the way on the other side, there are Labour members who think absolutely we should deliver Brexit, and even Brexit at the expense of the economy with a no deal. So there's definitely just, it's not a Conservative split, there's also Labour split. And what's happened here is dozens of Labour lawmakers representing Brexit-supporting constituencies are now kind of also saying that, look, Corbyn, we don't want a second referendum, we want a Brexit. And so therefore, if you start putting all of these together, you know, is Theresa gonna pull it off? In the end. The sweetener from Theresa here— I don't know if you read this this morning— this is of course Philip Hammond and the Chancellor. And the Chancellor is set to receive a multi-billion pound windfall for public finances when he presents his spring statement. Don't forget, that's coming in, what, a week or so's time, March 13th. Now the press have absolutely jumped onto this I think Sky News' headline is that Theresa May is basically paying off people of Britain to support her deal by throwing, I think it's an extra couple of billion up to the northeastern side of England, which obviously is a much more pro-leave area, in order to get some popular backing for her deal. So there's a lot of things going on here that are kind of tipping the balance potentially in the government's favor. For, for the Brexit situation. So with that being said, cable unmoved. I don't think— I think a lot of— don't forget, cable has albeit pulled back a little bit at the end of last week. We've had a phenomenal rise over the course of just a couple of weeks, and really this is the pricing in of all of the things that I've just mentioned coming to fruition. Now, just wanted to add in and let me put a rectangle here. We just had Morgan Stanley come out. Now Morgan Stanley, a fairly sizable US bank, and they've come out and they've recommended going long cable at market, in the spot market, at 132.40. So pretty much bang on where we're trading, and they're saying they're targeting 140. With a stop at 131. So MS have come out and they're pumping it with their clients. They're literally hitting market looking to go long with a stop down at 131, which is going to be— well, if I just mark it up about here, just a touch higher up, and looking for a trade return at 140. That's, uh, pretty bold. I can see what they're saying. You've got about, what, 1.5 points of protection downside for a little bit of volatility. But the way the news and this situation is developing is upside relief now because the probability of a no-deal is increasingly diminishing to a point of non-existent. And so therefore downside risks are very small. And so if we breach that September high that came in here, which was the previous week high, certainly that opens up a quick one to 135, and that will probably act as a decent support point for a continuation of a push higher. So obviously you're talking a lot more of a medium time frame here than anything intraday, but you know, quite interesting, US Bank being pretty aggressive on that call this morning. I'll leave you to decide whether or not you agree with them. Okay, a few final things then for me to mention, and that is, uh, I did check the weather forecast this morning in New York. I think they did have a bit of snowfall, but nothing towards what potentially could have been very dramatic for them given what the weekend forecasts were predicting. And this is what I was looking at on Sunday, which was the kind of projections of the weather patterns. You can see that was anticipated potentially a foot of snow in New York City. I don't think that has materialized, so not expecting there to be any impact really for traders' ability to be able to get to work stateside and on the northeast coast today. Power grid prices shot higher at the end of last week because of this unexpected cold snap. But if it hasn't really delivered in terms of this morning, then maybe you get a bit of a pullback in those prices that were elevated on Friday. So that is pretty much it from me. So for the week as a whole, I would say Brexit is relatively, um, you know, all the updates aside, hasn't been much response in the pound because everything is kind of going as is expected or planned. UK economic data is relatively few and far between. You've got the service PMIs probably to stand out on Tuesday. I would say any Brexit rumors about deal, no deal will come towards the end of the week. ECB on Thursday, non-farm zone Friday, the Chinese Politburo kind of National Party Congress meeting all week. So look out for their growth targets, any response that they make to the trade developments. One thing I would say say here is that the market has had, in terms of, um, response to the developments on this Bloomberg article about potential breakthrough— remember, this is not official line, these are people unidentified familiar with the talks— with that, how many times have we seen this where it looks like the trade talks are progressing, the market overextends, overinterprets, moves in a positive fashion and then it breaks down again, and then it goes up, it breaks down again. So is this any different this time round? Yet to be seen. Okay, I'll hand you over to Sam. Have a good day. Weekly strategy report will issue, uh, both of us later on this morning. Have a good week.

Hi guys and good morning. Hope you all had a, a good weekend. Let's have a quick look over at gold now, which is just sort of extending through that, that low of last week that Anthony mentioned. So definitely one to keep an eye on. Obviously with the, the gap higher we, we saw in, in US equities, uh, be worth keeping an eye should we push a bit lower on that, uh, idea of the gap fill. And, you know, just having a look at the S&P S&P before we go longer term on it. Might be worth having, uh, just an idea of potential long from there. Good resistance that we saw on Friday, you know, if we can break that low of the day, which we've tested twice already, uh, after the short down to here to go long, or vice versa, is not a bad one to look at. Both the same in the Dow and the NASDAQ as well. S&P on that longer term, you can see here, this is just from, you know, the levels drawn up from from last week or previously. And we're now sort of getting above that resistance line and testing 28.15, which was the high back on the 3rd of December, or what, around that area. I think, you know, you've got to favor the, the upside still for, for this market, um, in general. Um, and those previous highs, obviously the next sort of target in mind, uh, really going back to October. And we get through that and the lows that we broke down October 10th will be sort of the targets all round. And having a look at the NASDAQ for similar sort of, uh, chart time period, the, the 200-day moving average potentially one to, to keep an eye on. We found good support obviously this time last year, then got choppy as it did across all markets on the, on the breakdown to the back end of 2018. But we're above it, albeit slowing down a bit, but we have had 11 up weeks in a row now. Potential points for resistance to be aware of, obviously going back to similar sort of time in, in November as the S&P had levels there worth keeping an eye on. But unless we really have some, some negative news or any of these trend lines break, which have held so well, then really I think favoring the, the upside is, is the way to go. Let me see if I can get one of those close on. It's a bit choppy, but yeah, next sort of key target area, 8th of November high on the futures. And as long as we keep pushing to those points, I don't see any reason why to, to favor the downside as of yet. Dow Jones did have a down week last week, albeit very tiny, but obviously not far away at all from its, its high, all-time high. And what a key level it was, uh, last week's high. You can see the 8th of October low before that big 10th of October breakdown, which we saw the retest back on November held really well, that 8th of November level, the same as the NASDAQ one we just talked about. And then last week's high, uh, as well, uh, being tested there. So keep an eye on that. I think as sentiment will go, if we can get a confirmed break above, then really it should be just a matter of time before we get the all-time high in the Dow Jones. We know who's going to be very happy about that, 2. 8% away, uh, to the downside. As long as we can perhaps stay above this, uh, this, you know, trend that we've had a couple of tests on, price might start getting too squeezed in before we really get a push elsewhere. But equities, um, you know, pushing higher, pushing higher. A couple of markets as well to be aware of where we closed last week. The euro-pound, I know quite a few people were, were looking at this, and we got the retest of that multi-year, uh, low level that broke through, you know, not exactly to the tick, but you know, it's pretty good, isn't it? You can see the breakdown that we had, retest, and you know, I think we can start to see a bit more downside to this market now having closed the week below, uh, which, you know, albeit was in a bit of danger Friday night as we were going higher, but, uh, you know, the bears did take over again. Of course, headlines can change all of that, but I think while we are below that level, uh, the downside should be the one favored. And perhaps looking more intraday, I know the liquidity in the future sort of thins out a bit more intraday, but you can see perhaps looking at the pivot today, if we were to get, you know, a bit of a rally into the afternoon, break of that trend that we saw this morning, retest of the pivot, and not a bad place to potentially look to, to go short on that. Other markets on the longer time frame, Aussie dollar, we talked about the back end of last week how it was under pressure, and that is continuing. So having a look here on the daily chart, coming to some really key levels. That low that we had back in the sort of middle, early middle of, of, uh, of Feb, if that goes, then, you know, really the market could be sort of eyeing up a decent push down to the the low of the year. And the Kiwi just lagging behind a touch, and it doesn't seem all too far away perhaps from getting a test of this trend line. I know from a shorter-term perspective it'd be worth keeping an eye on, on here as we tested that low, uh, sort of point from the 20th of Feb. But keep an eye on that. I think if the Aussie continues to go, then, uh, the, the Kiwi will, uh, will follow suit if you like. Gold, as I mentioned, we, we did break that trend line, uh, last, uh, on, well, on Friday I should say, or Thursday night. And the way gold has moved off of previous trend line breaks going back to June last year, uh, you can really get a follow-through from that. And, you know, definitely one to, to be careful about when you're looking to potentially go long. Key area in this market to the downside, which might be attracted for a couple of, uh, potential people to get long or take profit. You can see all these lows, the back end of last year and then to the sort of end of January, around that area, looking 1273 up to 1280. There's obviously quite a key, uh, point where perhaps potentially you have quite a lot of stops where people have, you know, gone long and placed those below. So the way gold moves, it wouldn't be too surprising to get that anytime soon. 13,000 was, you know, potentially a point where people might look to go long, but that trendline breaking, the speed that it came down, it just wasn't interested in, in holding up there at all. From an intraday perspective, worth keeping an eye what happens with this trendline here. You can see going back from the 11th of April to the previous high that we had on 4th of Jan, we're testing that just now, and the reaction that we're getting not too far away. So worth having that trendline on just to see how we, uh, we get in. So if you were looking to get short at the moment without a pullback, you know, you would want this level to go. And you can see even then you've got a previous high of the 23rd of Jan. So quite a key area for gold today to keep an eye on. On your daily charts as well, for anyone that trades, uh, T-notes, obviously we had this pattern drawn up last week and we attempted twice at breaking out to the upside and quite a clear rejection closing below those levels. And it wasn't really until, uh, the 28th, last day of Feb, that we continued that push down, uh, to the downside and break of that pattern. Other key areas to the downside, obviously around the, the handle 121, but also would be quite interesting to see if we can get a retest of any of these levels, uh, previous lows as well, to potentially get short. Obviously with the the data calendar for the week ahead and non-farm payrolls Friday, you know, the dollar markets can obviously move a fair bit. So we would be preferring to get a better entry to get short than say now on the idea that the dollar might continue to strengthen and potentially on the index itself get back towards sort of 97. Obviously at the moment just above flat, but on the high of the week. The day. Oil, to wrap things up before having a quick look at the overview of the markets, at $58, it means it's been so important. It really has, not just from last week, again a couple of times, about the 9th and the end of November, and of course the beginning of February last year. Massive, massive level. And for now it's holding on the multitude of tests— 1, 2, 3— I I think we could, we could for sure still get another test of that. Uh, Trump's tweet last week doing little to sort of really consistently move the market lower. I'd, I'd say as a sort of line in the sand, 55 is obviously quite important, uh, for this sort of mini range that we're still in. If that was to go, I don't see why the market can't move quite quickly, uh, back down to around 50 And let me just get the rectangle out around this sort of area here. Again, similar to gold where you've got quite a lot of people, uh, that potentially are still trapped long or short, and there's a lot of liquidity around that area from those lows. And that's sort of looking $51 to $52. So $55 important for to the upside, um, and then to the downside sort of holding that. And then obviously $58, a key level to, to be aware of. Having a look at European markets, that gap has been filled early morning, uh, pivot holding quite well. And despite the sort of the, the strength of the euro dollar to the downside, potentially that might be the reason we're just sort of finding a bit of support on that weaker euro for the DAX as well. For US equities though, I would be keeping an eye to see how that low of the day holds, another test of that, a quick short down to the sort of high that we had on my days, not a bad idea in, in my eyes. But for now, obviously, uh, I wouldn't be going chasing gold too much, keeping an eye on that, that trend line. And the pound, obviously, for now relatively contained. Just to finish on the pound, um, that high that we had— obviously it's got the pivots on here— but the high that we had from September last year, uh, not a bad area. People would have looked to have taken profit I think short term I'd still do favor the upside, but it might be worth just waiting for a bit of, a bit more positive news, as you also do have a potential bit of dollar strength coming back into the market. Um, hope you all have a good trading day ahead. As I mentioned, the report will be out around midday, so any questions before that, please feel free, or after the report comes out as well. But if I don't speak to you, hope you have a good day and, and good luck for, for the rest of the week.