From last week “Both markets had down days on Friday with slightly bearish two-day reversal candles that may precede 3-5 days of weakness ahead.” The market corrected sharply on Monday and Tuesday, falling to its lowest level in a month, before resuming strength. The long-term trend remains up, and it looks likely that we will see new all-time highs this week for US stocks, and possibly new highs for the year for the Nikkei 225 and the Dax.
Brent Crude reversed sharply from the low on Tuesday, which held just above support and put in a strong rally, rallying to its highest level since mid-September.
Except for Palladium, which posted new all-time highs again this week, the metals have continued to consolidate. Copper made an attempt at breaking out from its multi-month consolidation, but the breakout failed, and the trend remains down.
This week sees the UK go to the polls on Wednesday, with Boris Johnson expected to win with somewhere between 14 and 50 seat majority. Such an outcome is expected and is likely priced in. However, a more significant margin of victory would probably be more bullish for the Pound and propel further gains. The long-term trend is up, and commercials remain net-long. At present, there appears only a slim chance that Corbyn will win, but there is a chance. A Corbyn win would likely be devastating for the Pound and trigger a decline towards parity against the dollar.
Interest rate futures
As has been the case for several weeks, interest rate futures continue to consolidate in a long-term uptrend. However, weakness has been sufficient that downside breakouts and a change of long-term trend to down are within range.