Black and White Technical Report: The Week Beginning 07/06/2021

Black and White Technical Report: The Week Beginning 07/06/2021, FP Markets

US and Australian Indices breaking out on the prospect of continued Central bank monetary support.

Underlying price momentum remains strong, with Australian Banks and large commodities play pushing higher.

Gold and Silver and Copper remain very bullish; however traders saw a midweek retracement to retest support levels. Important resistance levels are in play and Traders would now monitor the 3 metals for further breakouts higher.

The West Texas Oil contract again closes at a two year high.

Oil (WTI) has made an important breakout above long term resistance of $66.0 with higher targets in place.

XJO WEEKLY
Price structure:
With a strong finish on the Weekly bar the extended target is now shown at 7715. With a strong breakout a retest of the 7200 level will be an important event in the coming weeks. The underlying trendline has now moved to “tentative” (2 touch) but remains an important aspect on the chart for potential further consolidation above 7200 points.

The underlying Primary trend remains UP as the Index move out of the consolidation area above 6737.

Key equities for index performance are the 4 Banks in particular CBA along with CSL, WES, WOW, and large commodities plays BHP, FMG, OZL.

 

Indicator: Relative Strength
The RSI indicator has turned higher over the 70 level. A further reading over 70 would put traders on alert for some form of slowing divergence signal.

The RSI should be monitored for a potential move below the key level of 70 to show a shift to slowing price momentum.

Black and White Technical Report: The Week Beginning 07/06/2021, FP Markets

Comments from last week: The XJO has finished the week at the high and at a significant resistance level, this being the 2nd attempt to move past 7200 points. The strong finish and record closing price last week following 6 weeks of consolidation is a bullish signal for further gains in the coming weeks. Key support remains at the 6900 level with the current underlying Primary trend remaining UP.

 

XJO DAILY
Price structure:
A clear breakout from the intraday resistance level of 7172.0 with a strong close on Friday following the small bullish flag on Monday – Tuesday. Initial weakness would first be detected on a break of the trailing 5 period simple moving average. As the current index closing value 7295 is extended from the 5 SMA at 7172, simple observation suggests a reversion to the mean is highly probable short term even as the SMA moves higher.

 

Indicator:  Relative Strength
The reading shows a strong advance in the Relative strength reading, the reading can remain over the 70 level for some weeks. A reading over 70 is not a bearish signal, but rather a signal of strong momentum.

 

Indicator:  VOLUME
Overall volume has switched profile from bearish to bullish with higher volume day again on Friday. Strong volume would be expected on further breakout signals to confirm Buyer participation. 

Black and White Technical Report: The Week Beginning 07/06/2021, FP Markets

Comments from last week:  A very bullish picture from the mid-week flag pattern with a strong finish on Friday. The heavy weights of the Index are doing the lifting. Individual observation of the Bank and leading Commodity stocks price action looks very bullish for further continuation. Friday’s large range bar can be a strong signal for further immediate gains.

Daily support remains at 7090.8.

S&P 500 WEEKLY
Price structure:
The retest of 4046 is complete. The S&P has set a new Bullish Pivot point following last Thursday’s and Friday’s price action. This chart would now be monitored for a further breakout above the 4230 high as the primary UP Trend is resuming. The key observation for chart technicians is to look for an expanding range in the coming week as a signal of Buyer participation.

 

Indicator:  Relative Strength Indicator
The RSI observation remains the key signal and is currently reflecting stronger price momentum as the indicator moves back to the 70 level. With the overall reading moving sideways, this is not a level of over brought, and still only indicates very strong momentum, and can last for many weeks.  (This type of momentum can be a precursor to profit taking.)

Should the RSI show a movement below the 60 level, this would be an early bearish signal.

It should be acknowledged the RSI has also remained above the key 50 level for the past 12 months.

Black and White Technical Report: The Week Beginning 07/06/2021, FP Markets

Comments from last week: Overall short-range weeks and small price ranges between the open and close continues to show the S&P500 in consolidation. (Secondary phase). This is not a reversal pattern. The closing price for each of the past 4 weeks has been in the high part of the range, buyers have remained in positions over the weekends and this past week again the close is towards the high of the week with a 3 day weekend in the US.

Key support remains at 4114.0.

S&P 500 DAILY
Price structure:
The recent a, b, c? movement was the opportunity for the sellers to move the markets lower. Last Friday a bullish pivot point was completed (Weekly confirms).

The current consolidation range between 4062 and 4230 looks to be ending. This week may see a breakout higher above recent resistance, however following a breakout traders would look for a retest and hold of the 4230 level as confirmation of price strength. 

 

Indicator: Relative Strength
Relative Strength short term has turned higher above the 50 level. It is a good indication to see the higher low made, momentum is again shifting to an upward bias. The indicator should be monitored for continued readings above the “50” level. 

Black and White Technical Report: The Week Beginning 07/06/2021, FP Markets

Comments from last week:  The close over 4182 was the key last week in the Daily patterns. 4230 is the major resistance level to pass in the coming week. Trader would monitor this level for a price rally to close over 4230.0. During the coming week a close over this level followed by a close below this level could be an early fake out high and a bearish signal.

USD Spot GOLD – DAILY
Price structure:
The retest of $1863.66 level looks to be complete with a high close in last week’s bar.

Resistance at the OPd still marks the high price $1916.40 and will be the key level to take out on any price move higher.

Given the large price ranges of the last two days further consolidation could be expected between these two very important levels. 

The higher target of $1916.40 remains in sight as the underlying primary UP trend remains in place.

 

Indicator:  Relative Strength
Relative Strength turns sharply lower in line with the current retest of the trading range. As the indicator has made a new high in line with the price action, the underlying structure could now continue to be monitored for a “divergence” signal where the RSI fails to make a new high as price moves higher.

Black and White Technical Report: The Week Beginning 07/06/2021, FP Markets

Comments from last week: USD Gold has closed over the key resistance level of 1863.66 and above the important $1900 level. The recent days price structure is a Bullish Flag pattern, Friday’s OPu with eh high close in the range may signal further gains in the coming days. The overall chart structure remains very Bullish with the next target of $1966.80 in sight as the underlying Primary UP trend remains in place. 

Key support is now set at the old resistance level $1863.66, a close below this level would be a very bearish signal.

 

SILVER DAILY
Price structure:
The daily chart of Silver remains within a trading range with the lower level of $27.00 tested again. Key level for Silver remains the whole dollar amounts with intraday trading showing these to be $27 and $28. And its important to notice the Pivot point from the 19/5 has not been taken out in the past 3 weeks of trading.

Without follow through lower from last Thursdays sell down the overall picture for Silver remains bullish with $28.0 being the current mean level to trade over and hold. 

 

Indicator:  Relative Strength
A poor indication of price strength is showing in the Relative Strength Indicator (14) as the reading has moved over the 50 level and again moved over the 70 level for 2nd time, but rolled lower, an RSI Bearish divergence sell signal is in place . This type of movement could be expected in this type of price consolidation.

A full bearish signal will be displayed with RSI moving below the 50 level.

Black and White Technical Report: The Week Beginning 07/06/2021, FP Markets

Comments from last week: The daily chart for Silver shows continued consolidation below $28.40 and above $27.70. This type of consolidation can be observed at the support resistance level of $26.00 during April 2021.

The daily chart is absent of any strong down days and remains within the confines of a Primary UP trend.

Key support is the $27.70 level, should price close below this level a fast retest of the $26.0 level may be underway.

A close over $28.40 would be a very bullish signal for a further retest of the January $30.0 spike high.

AUD GOLD DAILY
Price structure:
The Daily AUDXAU is developing a Bullish flag pattern within the current UP trend, something to be expected following the strong price run from $2300.

A breakout towards $2541.0 would be expected on a combination of a strengthening Gold price with a weaker $AUD.

The smaller Australian speculative explorer stocks will remain news dependant.

 

Indicator:  Relative Strength
RSI has moved below the 70 level in line with the declining price action, this is not a bearish signal given the underlying price action is consolidating.

Black and White Technical Report: The Week Beginning 07/06/2021, FP Markets

Comments from last week: A significant result for the AUDUSD price to close over $2400 for the past week. The continued advance in the underlying US Gold price is now critical as the other important factor of this trade is the $AUD trading around the 7780 level.

This remains the driving factor for the Australian based Gold producers continuing to trade higher. NCM, NST, SLR and GOR 

The key psychological level of $2400.0 will be the key level to hold in any type of price retracement.

This momentum indicator has continued a wider swing higher over the key 50 and 70 level in line with price gains to reconfirm a valid RSI buy signal. BUT the RSI is rolling sideways as price puts in a new high, momentum may be about to slow.

COPPER DAILY
Price structure:  Inventories remain historically low.
Two important levels remain in the current price consolidation, $4.61 and $4.50.

Copper has made a strong move to breakout higher over the $4.61 level, the current retracement is an early back test of the breakout level.

The Gap open sell area at $4.36 is now in play should a further retracement take place.

This would not change the Primary UP trend underway

 

Indicator: Relative Strength
Confirmation of a loss of momentum will is shown when the RSI moves below the “70” level and below the internal low set during February. The highlighted level in red.

This may be underway as the current consolidation takes place.

It should be remembered the RSI can track above the 50 -70 level for many months at a time and currently remains a signal of very strong price momentum.

Black and White Technical Report: The Week Beginning 07/06/2021, FP Markets

Comments from last week:   The expectation of a “gap fill” has not taken place with an immediate reversal to close back over the $4.61 level. 

A very bullish signal for further gains as the large price range week closes on the high.

The all time high level of $4.61 will be the important support level to hold in the coming weeks.

This chart remains in a very strong Primary UP trend with the spike high point of $4.89 from 3 weeks ago the first level to monitor. A close over this level would send a very strong signal to the market traders of an exponential price move underway.

 

AUSTRALIAN VOLATILITY INDEX:
The US VIX declined 9% last Friday on a benign NFP print.

The Australian XVI could be expected to decline early this week back into a bullish window below 13. 

Overall, in the chart looking back to MAY 2020 the volatility levels have steadily declined, a good outcome for a forward steady and higher equities market.

The XVI is the difference of 1-3 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: The Week Beginning 07/06/2021, FP Markets

Comments from last week: The forward price of risk has again remained in the benign area between 11 and 13, a mildly bullish signal for further equity gains. Any close over the 13 level would be cause for concern and will reflect in the equities market as an early BEAR signal.

USD DOLLAR INDEX
Price structure:
The first observation of the USD Index is the Primary Down trend in place. Recently the price chart may have completed a bearish a, b, c type retracement higher. Traders would look for a breakdown below the 89.64 level as a signal for further declines.

Indicator:  Relative Strength:
While the RSI has continued to track sideways, while below the 50 level, Thursday’s spike above this level has reversed and again this will be monitored for a cross of the “30” level as confirmation of downward price momentum increasing. 

Black and White Technical Report: The Week Beginning 07/06/2021, FP Markets

Comments from last week:  The Friday closing bar (shooting star) is showing clear rejection of higher levels and now falls back within the confines of a developing Bearish flag pattern in line with the already established Primary down trend.

89.64 remains the first short term support level, a further close below this level may see the nest support of 89.19 tested.

This week a close over the high of Fridays bar would negate the bear signal, in this scenario, the DXY would now enter a potential trading range with 90.85 as resistance and 89.64 as support.

WTI CRUDE OIL
Price structure:  This commodity is news driven by supply -demand.
WTI remains with a Primary UP trend. The UP trendline remains “tentative”.

A strong closing range above years of consolidation resistance at $66.00. With a high close last week, the expectation would be for follow through this week.

Trader could reflect on the fact that a high Oil price not a bearish signal for equity markets.

The current breakout targets $75.20 the July 2018 resistance level.

 

Indicator: Relative Strength
RSI turning higher while above the 50 indicates increasing positive price momentum in the current price consolidation phase. 

Black and White Technical Report: The Week Beginning 07/06/2021, FP Markets
Comments from last weekThe 2 year high close of the WTI contract is a very bullish signal for a further breakout over the $66.00 level. Last weeks strong range with a high close, sets up further gains in the coming weeks.

  • Black and White Technical Report: The Week Beginning 07/06/2021, FP Markets
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