Black and White Technical Report: The Week Beginning 05/10/2020

Black and White Technical Report: The Week Beginning 05/10/2020, FP Markets

Last week I discussed the Structured Bullishness of the Major Indices’, this week uncertainty again as the leader of the free world enters hospital with COVID-19.

When future uncertainty enters the market with volatility readings heading higher, the outcome is the exact opposite of what investors require to remain bullish.

 

History shows during and after 2 earlier significant events involving the US presidents, D Eisenhower (heart attack) and JF Kennedy (assassination) markets only briefly reacted and in a short time recovered and resumed the original market direction.

 

Gold and Silver players should note the Precious metals have only posted a cursory reaction and both have failed to set any significant bullish marker.

 

 

XJO WEEKLY
Price structure:
The support level of 5725 remains the key level in the coming week, the Bullish hammer from 2 weeks ago has failed to follow into higher prices. It should be noted the low of last week did not break the low of 2 weeks ago. (it’s important) Volatility will remain until a confirmed breakout of this current trading range.

The whole price structure of the past 18 weeks remains in consolidation, these periods often lead to significant breakouts. Currently this market is swinging to a bearish breakout while price remains below 6200 and the midpoint of 5900 points. Traders should be aware October has a high statistical outcome for closing higher into the end of the month.

 

Indicator: Relative Strength
Relative Strength, has turned lower again and remains at the tipping point for a complete loss of any upside momentum. Further consolidation in the price chart below 6200 may this this dip further below the key 50 level targeting the 30 level.

Indicator: MACD
MACD confirms the swing “Sell” signal. This week has continued with a further dip in the fast line now crossing the slow signal line, only reflecting the slowing momentum. The completed full cross over becomes the Sell signal. It should be acknowledged this indicator is very slow to react and may track sideways in the coming weeks.

Black and White Technical Report: The Week Beginning 05/10/2020, FP Markets

Comments from last week: Last week posted an “outside period” up close, a bullish signal for further gains in the coming weeks. The low price of the week although not reaching the support level of 5725 is deemed to be complete, confirmed with the high range close of the bar. The Index still remains within the trading range with 6200 as significant resistance. The high range close of last week is a signal of further gains. Key stocks to watch are the 5 banks ANZ,CBA,NAB,WBC and MQG along with WES, and WOW.

 

XJO DAILY
Price structure:
It is of great concern the market continues to test the lower level towards 5725, and the down days are of a larger range than the up days. The potential for a “distribution top” remains. The Index although heavily weighted by the top 20 stocks shows the underlying sentiment of the market, further declines may develop towards a poor sentiment and follow through into the smaller end of the market.

 

Indicator:  Relative Strength:
RSI has turned lower again, an overall decline in the RSI can be seen from the June 2020 high, not a great signal for those looking to be Bullish.

 

Indicator:  VOLUME
Volumes continue increase on the “down” days, this is of concern as it suggests distribution not accumulation. Significant volume increases need to show on the “up days” to confirm the longer term bullish view. Fridays high close was not supported by strong volume. This will need to improve in the coming days to maintain a Bullish volatility breakout.

Black and White Technical Report: The Week Beginning 05/10/2020, FP Markets
Comments from last week:  Last Wednesday provided the “pivot reversal” from the retest of 5725 support. Last Fridays high close is a good signal for further gains early this week. 6056 is the first short term resistance level to test and cross in the coming days. The last week of September year on year has high correlation sell week. This is often followed by a Bullish October.


 

S&P 500 WEEKLY
Price structure:
With the Outside period Midpoint resistance shown at 3460 and Support at 3230 the S&P is displaying the hallmarks of a developing consolidation range, as we have seen in other markets these consolidation periods can last for months. Or in this case until the completion of the US elections. The #3 bar retest of 3230 support from 2 weeks ago is an early bearish signal followed by last week where the market closed towards the low of the range, a further signal for consolidation.

 

Indicator:  Relative Strength Indicator
Relative Strength turning sideways is simply a reaction calculation of the weeks price range. There is not much to glean from its position as the prior move was not over the “70” level. A move below the 50 level is a signal of renewed bearish momentum.

Black and White Technical Report: The Week Beginning 05/10/2020, FP Markets

Comments from last week: The week completed with a strong close “hammer bar” this is often the marker for a further bullish swing higher. The S&P 500 has made an important retest of the 3200 level and has closed the “gap” from 7 weeks prior. This is a great setup for further gains in the coming week. It should also be noted Tech stocks have regained some ground in the past week. The only caveat is the concern around the ongoing health pandemic dampening general market sentiment. 

  

S&P 500 DAILY
Price structure:
The developing support – resistance line at 3350 looks to the key short-term level to monitor. It is important to also note the a,b,c retracement from the Pivot point high is now complete. The current market structure remains in lacking direction, with further consolidation the best outcome.

 

Indicator: Relative Strength
Relative Strength has again turned lower and at risk of crossing the “50” level. Traders should be aware that the RSI crossing the 50 level does not generate a buy signal. As this type of price consolidation can last for many months.

Black and White Technical Report: The Week Beginning 05/10/2020, FP Markets
Comments from last week:  Several factors support this current pivot point reversal. The increased price range over the Thursday bars range. This also confirms the potential completion of the a,b,c reversal pattern as a retest of the 3200 level and the GAP fill. Historically in the S&P large range reversal bars are consistent with further gains ie the June reversal and the earlier Mid May reversal points. Most important is the RSI divergence signal, a highly reliable indicator for a change in directional volatility. This market may remain highly volatile going into the November US elections.

 

 

USD Spot GOLD – WEEKLY
Price structure:
The underlying price structure remains in a Primary UP trend.

The whole world still wants to be “long” Gold, until they don’t.

This is one of the better “technical” charts for establishing clear price support and resistance levels. While all of the reasoning is in place for a Bullish Gold market the price action tells a very different picture. The resistance levels are getting lower from $1970 to $1901.

The coming week will remain decisive for this market to regain the broken support at $1939.65 or at best hold the lows of $1850, both levels will be telling for the long term holders.

 

Indicator:  Relative Strength
Relative Strength turns lower to move below “70”, this can be monitored to remain above the “50” level, as the instrument may find consolidation at this “midpoint” level. Further selling below last week’s low may see a complete loss of positive momentum.

Black and White Technical Report: The Week Beginning 05/10/2020, FP Markets
Comments from last week:
Gold has staged a significant breakdown. The break of the short term trend-line with last weeks long range bar is a very bearish signal for further declines. The current weekly close remains on the $1850 “midpoint” of the July impulsive range. This is a good signal for interim support however the range of the weeks down close bar is strong and signals further declines. The next key support level is $1764, this also coincides with the Ichimoku future cloud support levels. (shown last week)

 

AUD GOLD DAILY
Price structure:
Australian listed Gold producers will remain under price pressure until this chart shows a Bullish structure, either by a falling $AUD or a significantly rising USD Gold price. Last Friday posted a bearish “Fake out” bar reversal, as the current larger bearish flag develops. $2610 remains the critical level to hold for the Bullish, a breakdown from this level would target $2560. Not included in this observation are the juniors with drilling programs underway.

 

Indicator:  Relative Strength
With the RSI now falling, the crossover below the 50 level is a signal upward momentum maybe at an end in the short term.
Traders would monitor this indicator for a swing higher in line with any price gains to confirm a valid buy signal, without this confirmation the current slow momentum is at risk of slowing further.

Black and White Technical Report: The Week Beginning 05/10/2020, FP Markets

Comments from last week: The AUD Gold price a factor of the $USD Gold price against the $AUD cross rate has a significant impact on the local producers. Many local producers are showing significant reversals and may test lower prices. The current retest of the $2610.0 level has found some support but there is not a key bullish reversal signal to be found. Further consolidation is in progress, this may prevent the local Goldies from finding any buyer support.

 

SILVER DAILY
Price structure:
The daily view of Silver has the potential to set a new “lower high” (LH?) as the Daily down trend remains in place. The chart now displays a new lower tentative trend line, further weakness in price may see this new level tested at circa $22.00. The July breakout level of $19.74 remains the downside price target in the near term. In the short term only a daily closing price above last Tuesdays high of $24.40 would set up a bullish view.

 

Indicator: Relative Strength
With RSI now below “70” and below “50” the recent “dip” below 30 shows the very weak price momentum underway. The current upturn still remains below the key 50 level and only reflects the current developing Bearish flag pattern.
Black and White Technical Report: The Week Beginning 05/10/2020, FP Markets

Comments from last week:  The significant breakdown from support of $26.18 has met further selling to retest the long term trend-line. Referred to last week as the weaker holders looking for opportunity elsewhere. Last Thursday’s bullish hammer bar has failed to follow through higher and must be resolved in the next 2 trading periods  to remain a potential bullish reversal signal. The important support level of $19.74 is now in play should this trendline support fail in the coming days. This price target is in line with the potential weakness to come in the Gold contract. Silver equities will remain under pressure until this contract finds some significant price support. 

 

COPPER DAILY
Price structure:  Inventories under pressure
During the past week the shakeout in the price of Copper. As price moved significantly below the key support level of $2.98 only to see a sharp recovery into Fridays close. A new tentative trend line is now drawn. The long lower shadow of last week is a warning sign of further selling to come, this scenario  should be monitored this coming week. In line with other market uncertainties Copper may consolidate around this critical level until more evidence of an underlying economic recovery.

Indicator: Relative Strength:
Relative Strength has moved strongly over the 50 level and now 70 level in the past 12 weeks. The current dip below the 70 level is in line with the price decline however the higher levels only continue to reflect the current strong upward price momentum, not necessarily an over brought sell signal.

Black and White Technical Report: The Week Beginning 05/10/2020, FP Markets

Comments from last week:  With Global recoveries under a COVID-19 cloud, copper has been the subject of profit taking following the breakout over $2.98 – $3.0 level. The current retest of the breakout level is an important development in the underlying PRIMARY UP trend. This level must now hold and the short term trendline must hold in the coming week to remain a bullish development.

 

AUSTRALIAN VOLATILITY INDEX
Probably the second most important chart behind the USD Index. Volatility has spiked higher on the news of President Trumps diagnosis. The immediate reaction has shown in the decline of equity prices. Historically a decline in volatility follows the types of events around US presidents. With the US elections so close, this level looks set to hold in the coming week.

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 05/10/2020, FP Markets

Comments from last week:   The Australian volatility Index has declined in the past week as the 2nd wave COVID-19 situation in Victoria shows signs of coming under control. Coupled with the current Government stimulus underway here and in Europe and the US a further decline in this index would remain a bullish signal for Australian equities.

 

 

USD DOLLAR INDEX
Price structure:
The big picture for the USD Index is now one of a Major base in place set over the August September period.

The breakout 2 weeks ago has tested the down trend line with the current retracement now testing the breakout level of 93.75.

This type of pattern is often the precursor to a new trend developing, only a breakout over the trend breakout high would confirm this potential outcome.

The result will be the AUD will remain under pressure, good for local gold producers and the Iron Ore players.

 

Indicator:  Relative Strength:
Bearish divergence has been negated with a very strong resurgence in upward momentum. An impending crossing of the 70 level would be a further bullish signal for this FX Index. This is at risk of placing further pressure on the precious metals sector.

Black and White Technical Report: The Week Beginning 05/10/2020, FP Markets

Comments from last week: USD dollar strength has placed pressure on the precious metals sector and the FX markets. Last week saw a strong rally out of the consolidation area in a highly volatile move to test the long term down trend line and see last Friday close over this marker. With the current “higher low” in place the DXY is now in a daily UP trend and should be monitored for further gains in the coming days.

 

WTI  CRUDE OIL
Price structure: This commodity is news driven by supply -demand.

A new trading range developing between support at $35.81 and resistance of $42.00.
This market remains under pressure from Covid related decline in fuel consumption and general over supply.
No underlying price trend is evident as the consolidation of from earlier 2020 plays out again.

 

Indicator: Relative Strength
RSI 2 weeks ago made a sharp recovery over the 50 level however last week the key 50 level was again lost.

Confused? So is the market.

Black and White Technical Report: The Week Beginning 05/10/2020, FP Markets

Comments from last week: The pivot bar from 2 weeks ago has not played out into further gains, importantly for now the $35.81 support level remains in place. Last week inside range is a good development but requires an immediate breakout higher, with this type of confirmation this contract has the potential to enter further consolidation period below the key $42.00 level with the $35.81 level as support.

  • Black and White Technical Report: The Week Beginning 05/10/2020, FP Markets
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