Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect

Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

SUMMARY:
All major Indices have failed to make a new high this week with the Nasdaq trading at the base of consolidation and at risk of further breakdown. The XJO continues in consolidation, however many equities are putting in substantial price moves and remain very tradeable. West Texas Intermediate remains within a Bull market move with the next long term price target the 2014 high. Gold and Silver continue to range trade, however the chart may show an early bullish development, that may still take two to three weeks to confirm.

XJO WEEKLY Price structure:

From the still in play OPu (Outside period up close) of 2 weeks ago the Index last week set an IP below the 7530 level, only continuing the overall 30 plus weeks of consolidation. With

IMPORTANT DISCLAIMER

The information in this report is of a general nature only. It is not personal financial product advice. It does not take into account your objectives, financial situation, or needs. You should therefore consider the appropriateness of this general information in light of these. The Australian School of Technical Analysis (www.astatrading.com) recommend that you refer to the Product Disclosure Statements of any financial products which are discussed in this report before making any investment decisions. ASTA accepts no responsibility for your actions and recommends you contact a licensed advisor before acting on any information contained in this general information report.

With the new Trendline in place a break of this line would confirm a bearish view and potential
retest of 7200 level.

Indicator: Relative strength 14:

Relative strength has turned sideways to down, as the reading remains above the 50 level, the next move in the RSI will be telling should it increase in value, this is a good position for further gains. The Relative strength Indicator reflects price momentum and would be expected to move sideways in times of consolidation.

Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

Comments from Last week: Last week the XJO200 Index set an Outside Period (OPu) indicating confusion between the Buyers and the Sellers. Although the trading volumes remain relatively low the large range of the week has set volatility levels higher (See XVI below) The high of the week was the retest of the Mid August 2021 high, what is important was the close below 7530 inside the real consolidation area. The underlying Trendline is now confirmed (3 touches) a break of this trendline will be the first signal of weakness. Statistics show the outside period up close has a remarkedly high (94%) incidence of indicating the high point within 3 bars. A closing price breakout above the 7530 level and all time high of 7632 would be an
important development for the Bulls.

XJO DAILY Price structure:

Persistent rejection of the 7492 level has set another pivot reversal, with the retest of 7370 underway. The past 6 trading sessions have set a small consolidation pattern, the key is the pattern follows the large range pivot from 2 weeks ago now setting up a further decline early this week.

Indicator: Relative strength 14:

The Relative strength Indicator (14) reflecting the underlying price momentum has moved higher on Friday’s movement and remains above the key 50 level. Indicating the upside momentum is positive. On a Daily basis continued movement over the 50 level would show positive momentum.

Indicator: VOLUME:

Trading volumes have been light in the past week during this consolidating price structure, with last Thursday putting in the highest volume day of the year.

Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

Comments from Last week: The Strong Daily movements lower last Thursday found support in the 7370 area, following the Fake out high (FO) this has set a second reversal pivot point. Last Friday, the up-close bar would only indicate a retest of the high is underway. The resistance level of 7530 will be the key level this week, a close over this level would set a very Bullish tone in the market.

S&P 500 WEEKLY Price structure:

The narrow open closing range shows indecision, the OPd described last week remains in play as the top price marker. With many Tech stock also listed in the S&P this Index remains vulnerable to a further breakdown to retest 4545 and lower.

Indicator: Relative strength Indicator 14.

It still remains a concern the RSI has not made a new high. The relative strength indicator has again moved to a Bearish divergence signal. The divergence “sell” signal will occur with a movement below the 60 level (redline).
The current sideways movement is reflective of a positive outcome for the week of consolidation. A reading below the key 50 level would signal loss of momentum and potentially further price weakness.

Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

Comments from Last week: The new All time high was again met with immediate selling to set a second outside period down close below the 4720 level. The S&P 500 remains in consolidation below 4720 and 4545. A break of the 4545 level would be a very bearish signal given the Nasdaq has already broken several important support levels.

S&P 500 DAILY Price structure:

The pivot reversal at the 4720 level has set a “lower high” in this daily chart, although Friday set a Gap open Buy signal the large range bar from the pivot pattern will be the key resistance this week. The S&P remains within A Daily range from 4545 to 4818. The Trendline is now confirmed with the 3rd data point.

Indicator: Relative strength 14:

Relative strength Indicator (14) has turned lower and is below the key 50 level. A further lower close below the 50 level would alert traders to further decreasing price momentum.

Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

Comments from Last week: Last Tuesday the S&P 500 set a new all time high and an early session Bull trap with immediate follow through lower on Wednesday. The current Thursday – Friday short-range days indicate the Sellers do not have control. The first level of support is the Tentative Trendline around the 4650 level. A retest of the 4545 level remains highly probable as momentum has now turned negative ( see RSI note).

NASDAQ DAILY Price structure:

The early week break below the 15530 level was met by immediate buying the short rally was again met by further selling (b) setting a pivot reversal. This may develop into an a,b,c type retracement, the result would be a new low below the tentative trendline. This would also confirm and set a Daily downtrend in place. In the immediate, Friday set a Gap open Buy signal, a new high above point “b” would be an important development.

Indicator: Relative strength 14:

Relative strength indicator moving below the 50 level is a sign of negative price momentum, however the current reading swinging around the shows waning momentum and should be monitored for a move lower as a precursor to price breaking to lower support levels.

Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

Comments from Last week: The failure of the Index price to close over the 3 Bar reversal pattern set 2 weeks ago has set the catalyst for the current large range price declines as buyer stops are taken along with added short selling. The Nasdaq is testing the critical lower level at 15530 a setting a close below the “tentative trendline”. The non-confirmation of the Tentative Trendline is of concern as the Index searches for lower level of support.
Currently the Nasdaq remains within a large consolidation area below 16776 with current support at 15530. A break below the support level would set a bearish signal with the potential to retest lower support levels.

USD Spot GOLD – DAILY: No Bull market.

Gold is building a small consolidation pattern below the key $1834.0. Given recent support at the $1788.0 level a potential higher low is in place. A breakout over the $1834.0 level would confirm the formation of a Bullish trend change and a retest of $1876.90. Historically Gold does not do well in extended equity Bull markets, also historically Gold will also decline on an initial equity market decline. Sorry.

Indicator: Relative Strength 14:

Relative strength shows a reading above the 50 level and turning lower, as upside momentum continues to be capped and prices consolidate.

Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

Comments from Last week: The rejection of higher prices at the $1834.0 level further confirms Gold remains within a large consolidation range with $1788 support again tested last week. USD Gold is not in a Bull market and shows NO signals for a major run higher as resistance levels are respected. The past 6 weeks show the 1-day Average True Range (ATR) up to $19, this is highly tradeable in short term trading time frames. A retest of the $1876.0 would confirm a bullish stance for Gold into 2022.

SILVER DAILY Price structure: No Bull market.

Silver again rejected the $23.50 level with an Outside range last Friday. Further consolidation is the best outcome.
A closing price above the $23.50 level would be a very Bullish move, and potentially force a short squeeze.
The recent “higher low” above the $21.60 level has been an important development for a Bullish trend to begin.

Indicator: Relative strength 14:

Current Relative strength is moving above the 50 level and now turning lower shows price momentum is simply fluctuating, typical of consolidation patterns. A continuing move above the 50 level would be very bullish in the short term.

Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

Comments from Last week:
“Silver has entered into an early stage of a Bull run” Wrong! Failure of the USD Silver price to breakout above the $23.50 has set a new Lower high (LH) as the lower support level at $21.60 is again tested. Silver has reminded us again the underlying Primary Trend remains down.

AUD GOLD DAILY Price structure:
With 3 low points set within the descending pattern current price movements have staged a minor breakout as a new “pivot point” is set. The first resistance point may be $2541.0. Underlying momentum within the $AUDXAU price will reflect on local producers, in this development the expectation is for positive price movements.

Indicator Relative strength 14:

Relative strength moving sideways has turned higher and remains above the key 50 level this shows positive momentum, this ranging movement is typical with consolidation areas.

Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

Comments from Last week: $AUD-XAU remains within the descending consolidation pattern. The “3 low” pattern remains in place. From this type of price action, the expectation is for a breakout higher. A lower $AUD would facilitate this type of move.

COPPER DAILY Price structure:

Continued rejection at the $4.50 area has set a weekly “shooting star”, however the closing price remains above the key Midpoint $4.33 level. Copper remains within a well-defined consolidation window between $4.0 and $4.80

Indicator: Relative strength 14:

Current readings swing above and below the 50 level reflect the current consolidation underway. The key for now is the RSI remains above the 50 level as a reflection of ongoing and any positive underlying positive price momentum.

 

Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

Comments from Last week: The $4.33 tested again last week, over all this consolidation area looks well supported the lower shadows of the Weekly candles indicate as price probes lower to the $4.00 level immediate buying take place.

AUSTRALIAN VOLATILITY INDEX:

Volatility is rising hence the forward price of protective options increase in price as the “Vega – Delta” component increases. This will place pressure on local equity prices. 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: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

Comments from last Week: The mid-week announcement by the US Federal reserve saw a risk off event taking the XVI higher as the forward price of PUT insurance increased. The close has remained inside the “bullish for equities” zone, a further breakdown in the value of the XJO would push the XVI higher.

USD DOLLAR INDEX Price structure:
The current breakdown below recent secondary consolidation support level of 95.70 appears to be unexpected given the resulting move was the large range bar under 95.70. The build-up of longs seemed to be liquidated as stops were hit. This retest is an important development within a Primary UP trend, however a breakdown below this current support level would target 93.50. This level should be monitored for support as the price movements has set an Outside range on Friday, this type of bar is often the precursor to a reversal, in this case higher.

Indicator: Relative strength 14:

The Relative strength has turned lower in line with price movements and should now be monitored for a Bullish divergence signal.

Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

Comments from Last week: Last Friday’s strong move lower has again tested the 95.70 level. This secondary consolidation area continues until a breakout above 96.93 or below 95.70. The outcome of a breakdown will show an increased $AUD, potentially bringing down the AUD-XAU price, bad result for local Gold producers..

WTI – CRUDE OIL, Price structure:
This commodity is highly news driven by supply -demand. Last week produced a bull market move on an expanding range with a new closing high over recent resistance.
The June 2014 high remains the price target, the current consolidation range from $61.80 to $84.25 ($22.45) extended give a price target of $106.70. WTI Oil remains within a Primary UP trend, this should underpin the Australian Oilers WPL STO.

Indicator: Relative strength 14:

The current price strength has not produced a new high in the RSI, this will now be monitored for a developing divergence signal, although it may take many weeks to develop. The Relative strength crossing the 70 level is not a signal of over brought as the reading can remain strong for many weeks.

Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets

Comments from Last week: The current price rally above the $75.20 level following the successful retest of the two lower support
levels sets up the WTI contract to test the $84.25. Following this recent 3 weeks of gains an intra week retest of $75.20 would be viewed as a positive.
The underlying Primary Trend remains UP. The new trendline is now in place. Relative strength Indicator turning higher as of 3 weeks ago the market remained in balance. The sharp turn higher is a very good signal of sharply higher price momentum, the cross above the 50 level now continues to confirm the bullish view.
  • Black and White Technical Report: 17/ 01/2022 – Market technician’s view of charts that effect, FP Markets
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