Black and White Technical Report: The Week Beginning 01/02/2021

Black and White Technical Report: The Week Beginning 01/02/2021, FP Markets

The past week will go down in history as a week where, in a small way Wall street was beaten at its own game by Social media traders. Although only one Hedge Fund required an external funds injection to remain solvent, many others are feeling the pain. The risk in the coming weeks will be the ability of the Hedge fund industry to manage further margins calls should Social media traders continue to target specific stocks. The alarming observation in this saga is it has only taken the targeting of 2 stocks GME & AMC to bring one fund to the point of collapse.

 

Most major indices’ have posted an Outside period down close, in the past week following strong gains, this at a very high percentage outcome for marking a key turning point.

 

The future risk is further Hedge Fund Failures; this may lead to contagion failure of other funds leading to a broad sell down to relieve margin pressure across the markets.

 

In the event of a broad sell off, Gold and Silver may also be sold down as a reaction to market movements.        

 

 

XJO WEEKLY
Price structure:
Last week posted an (OPd) “outside period” down close, when found after an extended run-in price can be the catalyst of a downturn in prices to find support. The high of 6832 will be the key resistance level in the coming weeks. The large range week has taken out the 6670 support level and all gains since November 2020. A very high probability of follow through in the coming weeks. 

The next key support level is 6430 points.

 

Indicator: Relative Strength
The RSI indicator has remained over the key 50 level, last week turned lower, a sign of changing price momentum. This should be monitored for a move below the key level of 50 to show a completed shift to bearish momentum.

Indicator: MACD
MACD remains a swing buy signal, again this highlights how slow this indicator can be in a fast market. It should be acknowledged this indicator can be very slow to react on a weekly basis and may continue to track sideways in the coming weeks as it did during 2019.

Black and White Technical Report: The Week Beginning 01/02/2021, FP Markets

Comments from last week: The 6670 level has again provided support, this will be the level to monitor in the week ahead. The XJO has posted a solid breakout from the short consolidation range, with a closing price in the high 1/3 of the range this remains a good look for further gains in the coming weeks.

The impulsive price bar of 3 weeks ago remains the dominant bar in the immediate range.

Use the 6740 level as an indication of closing price support level above or below in the coming week will indicate if the buyers can hold the market higher to retest 7130.

Primary Trend remains UP.

XJO DAILY
Price structure:
The Daily chart of the XJO now displays a classic “bear trap” only seen in hindsight, but an important observation when developing a view of current market price action.

Last Thursday’s “impulsive” movement has been followed by the retest of the initial breakdown below 6765.

With a momentum move now underway support at 6510 is the next critical level to hold in the coming days.

 

Indicator:  Relative Strength
4 weeks ago the bearish momentum signal was negated as the RSI put in a 2nd “higher low” prior to the continued move over the key 50 level. Expectation was for a continued track higher. The current swift movement below the 50 level remains the dominant message that upside momentum has been lost.

 

Indicator:  VOLUME
High volumes are returning to the down days, again a signal of distribution. 

Black and White Technical Report: The Week Beginning 01/02/2021, FP Markets

Comments from last week:  Last Tuesday’s pivot reversal, showed immediate follow through over 6765 resistance.

With a clear breakout over the Daily resistance level shown at 6765, a Daily retest of this level would remain consistent with the current progress in price action.

Buyers remain in control of the price action.

 

S&P 500 WEEKLY
Price structure:
Most major indices’ have posted an Outside period down close, in the past week following strong gains. Last week’s reversal has cleared 4 weeks of gains. The first real support level is observed at 3600 points being the breakout level from November 2020. 

Also see last week’s comments, The last marked OPu ( 4 bars back) has provided ample warning as the trigger for this now much anticipated sell down.

Indicator:  Relative Strength Indicator
Relative Strength remains above the key 50 level and has set a Bearish divergence from price. This not the same but remains very similar to the Jan Feb 2020 divergence setup.

It should be acknowledged the RSI has remained above the 50 level for the past 6 months.

Black and White Technical Report: The Week Beginning 01/02/2021, FP Markets

Comments from last week: The outside period (OPd) of 3 weeks ago remains the dominant price bar, last week closing over the high of the OP bar shows the buyers in control. This current move may be considered “extended” however the lower shadow of the OP bar gave the sellers a chance to continue the price lower. This action failed with the closing price at the high.

The Primary trend of the S&P 500 remains UP.

S&P 500 DAILY
Price structure:
The importance of correct trendline application can be highlighted on this Daily chart, following the rejection of the 3826 high the “tentative” line marked some weeks ago has been disregarded with last Friday’s breakdown.

(Last week’s comments have played out.) 

On further price declines daily support now remains at 3580 – 3600. The increasing range of the price bars is a sign of distribution.

 

Indicator: Relative Strength
Relative strength short term has turned lower from over the 70 level, it is a measure of immediate weaker price momentum and signals and extended move ending.

With the underlying price movement higher and the declining Relative Strength Indicator, traders should be on guard for weaker price in the coming weeks.


The RSI should be monitored for a movement below the 50 level and further move below key 30 level as a loss of upward momentum to confirm divergence.

Black and White Technical Report: The Week Beginning 01/02/2021, FP Markets

Comments from last week:  The price breakout over the 3826 high is significant, Last Fridays retest and reject is more important. The potential is for a Bullish flag to develop at these levels. For the Bears an early sign of price breakdown will be the break below the recent “Pivot Point” and retest apart of a “gap fill” on the way to the current tentative trendline.

Relative Strength short term has turned lower from over the 70 level, it is a measure of immediate weaker price momentum and signals and extended move ending. With the underlying price movement higher and the declining Relative strength Indicator, traders should be on guard for weaker price in the coming weeks.

The overall price structure remains positive inside the Primary Weekly UP trend.

 


USD Spot GOLD – WEEKLY
Price structure:
This is not a bullish picture with resistance remaining at $1855 and support at $1826, Gold remains trapped within a tight range and susceptible to a further breakdown to test the $1764.0 level.

Spot Gold remains with a primary down trend with the OPd of 4 weeks back remaining the dominant price bar. To create a bullish picture a weekly price close over the resistance level of $1970 is required.

Currently the price range of Gold remains highly tradable.

 

Indicator:  Relative Strength
Relative Strength turns lower and crosses the key “50” level. This is a key indicator of “slowing” price momentum, a continued move lower would only reflect negative price momentum both in the Daily and Weekly charts.

Black and White Technical Report: The Week Beginning 01/02/2021, FP Markets
Comments from last week: Gold remains trapped below $1855 resistance, with last weeks closing price remaining well down from the high of the week.

With the a,b,c corrective move not resolving higher into a continuation of the longer term Primary UP trend, it should be considered Gold may enter into a wave 3 down to retest $1764.0 and the Trend line around $1700.00

It remains critical Gold hold the current levels to potentially set a new “higher Low” and further trade over resistance of $1970.0

 

AUD GOLD DAILY
Price structure:
The Primary down trend remains with continued rejection of higher price at the $2393.0 level. While the underlying USD Gold price remains within a trading range, this AUDUSD price movement is dependant on the $AUD movement with a lower $AUD offering better “margins” for local producers. Until the $AUD falls or the USDXAU gold price rally significantly, local producers will remain under pressure.

 

Smaller Gold plays remain dependant on news flow and drilling results.

 

Indicator:  Relative Strength
With the RSI turning higher from below the key 50 level showing increasing positive momentum. 

This indicator has swung around below the 50 level since August and remains a key observation for weaker prices on slowing momentum. This momentum indicator needs a continued swing higher over the key 50 level in line with any price gains to confirm a valid buy signal.

Black and White Technical Report: The Week Beginning 01/02/2021, FP Markets

Comments from last week: The current $2393.0 level remains the key support and resistance level as Gold  in AUD terms remains within a Primary Down trend.

The current “LL” level at $2354.13 is the key support in the event of further declines.

However Last Thursday – Friday bar with lower shadows offer some form of support above $2393.0.

The outcome is continued price weakness in Australian Gold producers.

 

SILVER DAILY
Price structure:
A breakout over the $26.00 level is important and as important as rejection of the $27.70 resistance level. Overall Silver remains within a 6 month trading range. A daily closing price over the $27.70 resistance would signal a price rally underway. Support will remain at $26.00 and this level should be monitored during any price weakness in the coming days.

  

Indicator: Relative Strength
Relative Strength has turned sharply higher and now again above the 50 level, operating in line with the underlying price movement and remains a good signal for further improvement in price momentum.

Black and White Technical Report: The Week Beginning 01/02/2021, FP Markets

Comments from last week: The daily chart of Silver continues to develop resistance at the key $26.00 level. Last Friday confirmed a bearish Pivot Point reversal, with the trend line being the first price target.

It is becoming urgent for the current consolidation below the $26.00 resistance level to be resolved higher, further delay will test the resolve of holders with the potential for Silver to make a sharp fall back into test the $22.50 levels.

COPPER DAILY
Price structure:  Inventories under pressure.
Copper has entered a good consolidation range above key support at $3.47 – $3.50. These consolidation periods can last many weeks. The initial price target of $3.80 remains.

In the coming week look for further support above the $3.47 level, a close below this level would indicate profit taking with the next support level shown at $3.30 as the target on any downside movement.

 

Indicator: Relative Strength
Relative Strength has moved below the 70 level (just), underlying the consolidation process underway. An early BEARISH divergence signal has so-far further developed and remains in place, this will still be monitored in the coming week. Further confirmation of a top will be shown if price moves below the $3.48 level and the RSI moves further lower below the 70 level.  

Black and White Technical Report: The Week Beginning 01/02/2021, FP Markets

Comments from last week:  Double inside bars a sign of consolidation within the current extended move. This is the opportunity for the sellers to enter and take profit. But the consolidation remains bullish so-far while above $3.47 / $3.50 support levels. Consolidation periods can run for many week’s, this will remain bullish for underlying Copper producers.  OZL, SYR, ORE

AUSTRALIAN VOLATILITY INDEX:
Just when it was looking bullish for equities, the XVI has again moved higher on potential outcome in the US hedge fund scene. As the week has not ended on the high of the range, traders should monitor this indicator as the sentiment reading of the markets.

 The XVI is the difference of 1-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: The Week Beginning 01/02/2021, FP Markets

Comments from last week: Working it’s way down a good outcome for Australian equities in the longer term. Best result will be a close below the “13” level as the new year trading volumes increase with a lean to the Bullish side.

 


USD DOLLAR INDEX
Price structure:
The “bullish flag” has shown a breakout higher last Wednesday to test the down trend line with some rejection. A small inverse “head and Shoulder” pattern has now developed and targets the 91.66 level on any further breakout higher.


Indicator:  Relative Strength
While the RSI has again moved lower and back over the 50 level, the indicator remains a signal of strengthening price momentum above the key 50 level. Traders would look for an RSI move over the 70 level to suggest a more significant momentum move higher is underway, this remains highly probable.

Black and White Technical Report: The Week Beginning 01/02/2021, FP Markets

Comments from last week:  The USD index continues to “trend” lower. The current price rejection below the 90.66 level may be setting up a “bullish” flag pattern. This chart remains in the balance for setting up the early stages of a new UP trend (bullish RSI divergence) or a complete breakdown in line with the current Primary Down trend.

WTI CRUDE OIL
Price structure: This commodity is news driven by supply -demand.
3 weeks of consolidation above the $50.60 level, this remains bullish for further gains as the previous “impulsive move” remains in control of the price chart.

Traders should show caution of price failure, should the price close below the $50.60 level.

This is a potential scenario with the Relative strength remaining over the 70 level.

 

Indicator: Relative Strength
RSI turning higher over the 50 level and now over 70 remains in a very good place for further momentum price gains until a dip below this level.

As the indicator is now over 70, this should also be monitored for a potential divergence signal.

Black and White Technical Report: The Week Beginning 01/02/2021, FP Markets

Comments from last week : West Texas has remained over the key $50.60 level as the price further consolidates. Last weeks “retest” of the $50.60 level provides short term support, and this level should be monitored for further support in the coming week. 

WTI remains in a Primary UP trend with a retest of $61.80 highly probable in the coming months.

  • Black and White Technical Report: The Week Beginning 01/02/2021, FP Markets
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