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Black and White Technical Report 01/08/2022

Black and White Technical Report 01/08/2022, FP Markets

Is this the new Bull market?  It’s a start, but probably not.

The US Federal reserve indicated that the pace of rate increases may slow, the market believes the increases may stop here. 

One market observation is the Fed needs to get interest rates over the current 9% inflation rate to become effective in controlling the economy.

Basic trend analysis this week indicated a strong momentum recovery is underway, this has  also been witnessed in the Precious metals sector with strong recoveries in Gold and Silver.

Even Copper found good support with a strong price rally that may continue.

This sudden risk “on” can be subject to sharp profit taking, for short term traders. 

The West Texas contract has again tested the $94.0 support level as the commodity develops into a trading range pattern.

 

XJO WEEKLY    
Price structure:  Bearish Flag playing out

The developing “bear flag” has trapped the short sellers as the market has moved and closed above 6930 resistance. This development confirms a Primary move underway. Only a weekly close above the 6930 would confirm this view. The next fake out point will not occur until a cross of the 7300 high point set during late May.

 

Indicator: Relative Strength 14

Relative Strength has closed above the 30 level. Overall price momentum still remains on the negative side of 50. However as Relative Strength continues to move towards the key 50 level a sign of improving price momentum is emerging.

Black and White Technical Report 01/08/2022, FP Markets
Comments from last week: The concern is the past 5 weeks of price action have developed  into a Bear Flag formation. This will be confirmed should a breakdown below the 6400 level be the recent low set on the 20th of June 2022. A break of this level would also show a breakdown of the current “tentative” trendline. The Market closed towards the high of the week, only a further strong advance would negate the above scenario and lead to a retest of 6930 now the key level to cross this week.

 

XJO DAILY  
Price structure:

From indecision early in the week to a solid close. The Daily chart is setting new trending higher highs with extended low to high range days last Thursday and Friday. The Index has risen for 8 trading days straight, this is a rare occurrence and profit taking may enter the market on any signal of underlying weakness.

 

Indicator:  Relative Strength 14

The Relative Strength Indicator (14) reflecting the underlying price momentum has moved higher above the 50 level from below the 50-level indicating the continued change to positive momentum. A continuing move above the 50 level would be a very positive indication for further gains in the underlying Index. 

 

Indicator:  VOLUME

Last Friday’s higher volume bar again remains an encouraging signal to indicate new buyers are entering the market. Rising trading volumes are required to confirm the upward bias of the Index.  Overall these are not really present within the past 5 trading days. Only strong volumes over 1 Bil on a Daily basis would indicate strong new money buying. 

Black and White Technical Report 01/08/2022, FP Markets

Comments from last week: A good technical breakout above the 6765 level last Thursday with Friday “retesting” this important Resistance / Support level. This is the point of support for Buyers to hold in the coming days. With the Weekly chart displaying a Bearish Flag pattern an early breakdown will be evident in the Daily chart with a close below the 6600 level.

 

S&P 500 WEEKLY
Price structure: 

From building a multi week base along the 3715 level this current push higher follows the previous week’s “pivot point”. Last week set a longer range bar than previous weeks ranges and confirmed buyers in control, also indicated by the close towards the high of the week (set Friday).

 

Indicator:  Relative Strength Indicator 14

Relative Strength has shown a Bullish divergence signal 4 weeks ago, setting the 2nd Pivot point low. The “Buy Line” shown  has been crossed and this indicator continues to show improving positive price momentum. Continuing price movements should show the reading close over the 50 level to give a solid buy signal on momentum. Overall, this type of divergence signal is a good indicator for further price gains.

Black and White Technical Report 01/08/2022, FP Markets
Comments from last week: Last week I referenced the 3715 level as support, the current follow through has set another bullish pivot point. This index has traded towards the 4050 level with some late week rejection, not a good signal for further gains. But the 4050 level and the 3715 level are good reference points to establish a “view” of future price action. A close above 4050 would confirm the current base pattern, however a close below the 3715 level would indicate the sellers have control of the market direction with risk continuing to the downside inline with the primary trend.

S&P 500 DAILY
Price structure:  Developing bullish structure.

Sign of a trending market;  The successful retest of 3940 with a strong pivot reversal following through to higher values. Current closing price movements are above the extended down trend lines, further confirming a momentum breakout move underway without resistance. Following a strong price move the expectation would be for further consolidation before the next decisive moment.

 

Indicator: Relative Strength 14

The Daily Relative Strength shows improving price momentum to the upside. RSI is now above the key 50 level, a further movement higher over the 50 level would remain a strong momentum buying signal.

Black and White Technical Report 01/08/2022, FP Markets
Comments from last week:  Daily support / resistance is shown at 3940, this level was tested during last Friday’s session. The short-term outlook is for this level to hold, a close below this level would alert traders to the potential of further falls to refill the “Gap” showing at the 3800 point level. Continued closes above this level shows Buyers in control with a potential retest of 4114 consolidation area.

 

NASDAQ DAILY
Price structure:  Primary DOWN Trend remains

The consolidation period of May/June has been cleared by the current price movements. The Nasdaq has built a significant basing pattern that should hold price action in the immediate coming days/weeks. The Nasdaq has entered into a Daily UP trend with a series of higher lows and higher highs, the important observation is the breakouts above potential resistance levels. Only a daily close below the 12573 level would negate this view.

 

Indicator: Relative Strength 14

The indicator again moving over the important 50 level, the current upturn is a positive observation for further gains. With a continuing move, the indicator must remain over the 50 level, price movement will remain positive and have the potential to develop into a new UP trend.

Black and White Technical Report 01/08/2022, FP Markets
Comments from last week:  The Nasdaq 100 appears the strongest of the US Indices, however this week the first real resistance appeared at the 12573 level. The wide base starting from May 2022 has set up the current push higher. Last Friday’s reversal OPd (Outside Period down close) is a key reversal signal that will be resolved this week. With a solid close over the high, the next price target is shown at 13542. An early week close below 12175 would set up a bearish signal and potential retest of the Trendline.

USD  Spot GOLD – DAILY: Is it a Bull market?  Answer = No

Precious metals have made higher prices in the past week, potentially a significant short cover operation as positions are closed. The threat of interest rates and inflation pressures may finally be adding to the support of the precious materials. Gold technically remains with the definition of a primary down trend.

 

Indicator:  Relative Strength 14

Price momentum is working higher and above the 50 level, the Relative Strength Indicator again turning higher is a reflection of the overall increase in price. The small UP turn shows the momentum strength. Price consolidation would naturally see the RSI drift back too around the 50 level. A strong movement either way will show the next directional move.

Black and White Technical Report 01/08/2022, FP Markets
Comments from last week:  Large price range low to high OPu marks the retest towards $1676.0 support. The current close over $1720 seems weak with the final bar closing “midrange”. Gold remains within the definition of a Primary down trend. A further retest of the $1676.0 could be expected should a close occur below the $1720 support / resistance level.

 

SILVER DAILY    
Price structure:   Bull market? – Early signals are important. None

A sharp price recovery suggests a short position cover from the recent decline. Silver remains within a Primary down trend. The large consolidation area between support of $20.44 and resistance of $22.50 may provide some headwinds to further gains. However Silver remains highly tradable into this area. With the close sitting below the $20.44 level a close over this level will be an important development.

 

Indicator:  Relative Strength 14

Current Relative Strength is moving higher and remains above the 50-level, RSI turning higher reflects the underlying momentum. A continuing move above the 50 level and higher would be very bullish in the short term, and the potential for a further move higher remains only should price close above the $20.44 level.

Black and White Technical Report 01/08/2022, FP Markets

Comments from last week:  Silver is setting a daily secondary consolidation pattern above the $18.40 level. A further close above $19.50 would confirm the base. This type of base is weak and subject to a further close below the $18.40, this level would set a very bearish signal for lower prices in the coming days.

 

AUD GOLD DAILY    
Price structure:  Consolidation.

The $2537 level has provided resistance again during the past week, only a closing price cross above this level would provide a strong buying signal. However, the upturn may remain a positive for local producers and follow on price gains from the past week.

 

Indicator Relative Strength 14

Relative Strength has turned higher from below the 50 level, this shows an increase in positive price momentum and remains a strong positive for further gains. Traders should look for a cross of the 50 level as a very positive development for underlying price support.

Black and White Technical Report 01/08/2022, FP Markets
Comments from last week:  The bullish pivot point reversal set last Friday is based on the USD Gold price putting in a small rally higher. With some stability in the $AUD the AUD XAU price has moved in unison with the USD XAU price. Some recovery in the Australian producers could be expected this week.

 

COPPER DAILY   
Price structure:  Primary DOWNTREND

The follow on higher from the 3 bar reversal from 2 weeks ago has set a bullish pivot point. Often the market will attempt a “retest” of the law to confirm the sellers are exhausted. The strong range of last week suggests further gains as a follow through this week.

 

Indicator: Relative Strength 14

Current reading has swung from below the 30-level as downward momentum has slowed.  The key now, as the RSI has swung back above the 30 level as a reflection of ongoing price gains is for a cross of the 50 level giving a strong buy signal.

Black and White Technical Report 01/08/2022, FP Markets
Comments from last week:  Support at $3.20 is now in play with the Inside period set this week, showing the market in balance at this current level. The inside period offers a strong trading signal should the price break the high or low. Given the current weak momentum the potential remains for a retest of the $2.98 – 3.0 level.

 

AUSTRALIAN VOLATILITY INDEX

The small decrease in volatility has reflected in the late rally in Australian equities. For continued support of equities, the XVI should move below the “13” level.


Last week the 3 months forward PUT option insurance has decreased, suggesting a more risk on approach.


While the final reading remains above the key “13” level as a bearish indicator further declines in equities may be expected.


The cost of 3month forward PUT options is decreasing from recent elevated levels.

 

The XVI is the difference between 3-month forward pricing of ETO Options against  current month.


As markets anticipate events, the forward priced option volatility changes, hence as forward price changes, this “skew” in pricing is measured in this XVI.

The XVI value works as an inverse observation to the underlying market.  

Black and White Technical Report 01/08/2022, FP Markets

USD DOLLAR INDEX  
Price structure:

The USD$ index is developing a consolidation area above the 105.80 level. A close below this level would offer a strong signal for further declines. However a signal of support would be a retest of the 107.40 level in the coming days. Equities and Precious metals will react strongly to a breakout either way. The underlying primary trend remains UP. 

 

Indicator:  Relative Strength 14

The Relative Strength has turned lower in line with price movements and should now be monitored for further momentum weakness as the current reading below the key 50 level will move lower to sideways should price decline further, only a continued reading above the 50 level would indicate continuing strong price momentum.

Black and White Technical Report 01/08/2022, FP Markets
Comments from last week:  Price resistance is developing below the 107.40 level. Last Friday’s OPu is a strong signal for a turning point. Only a close above the 107.40 level would confirm this view. The underlying Primary trend remains UP.

 

WTI – CRUDE OIL
Price structure:  Full Bull Market remains.
This commodity is highly news driven around supply -demand.

The current retest of the trendline in confluence with the $94.0 support level gives a view that the WTI contract could break either way higher or lower (sorry). The next price movement will offer insight to the $94.0 level providing support or becoming the next resistance level. The preference is for the $94.0 level to hold in the coming days. The underlying Primary trend remains UP.

 

Indicator: Relative strength 14:

Relative Strength has developed a divergence signal as price makes a new high without the Relative Strength making a new momentum high. The sell signal has developed now that the RSI line has crossed down below the internal low (red) line currently in-play. The strong move towards the 30 level is confirming weakening price momentum. Last week the RSI turned higher from the 30 level, this is a good signal for the $94.0 support level to hold. 

Black and White Technical Report 01/08/2022, FP Markets
Comments from last week: The current consolidation below the $107.73 level with the low close last Friday suggests a further breakdown below the $94.0 level. Next support is shown at $84.25, the current breakdown of the trendline is a concern for the immediate bullish case for price, this level needs to be reclaimed in the short term.

  • Black and White Technical Report 01/08/2022, FP Markets
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