Black and White Technical Report: The Week Beginning 07/09/2020

Black and White Technical Report: The Week Beginning 07/09/2020, FP Markets

It is extremely difficult to manipulate the major indices’, however last week evidence came out that the NASDAQ was manipulated via the Options market with significant buying of Call options in the FANGS, the result was stock buying to hedge risk pushing prices higher.

 The result was an exhaustion top in the S&P 500 and NASDAQ and the FANG stocks. (Facebook, Amazon, Netflix, Google, +Tesla) 

Following this volatility event it would now be expected the markets will consolidate around last week’s highs and lows.

WTI was not spared as the contract broke to the downside.

Gold and Silver continue to consolidate following their individual exhaustion tops.

 

XJO WEEKLY
Price structure:
Last week saw the closing price below the middle of the consolidation range, a signal for further weakness in the coming week. The weekly range is also larger than 2 weeks ago indicating an increase in downward momentum. 5720 will be the significant support level to hold this week.  Over-all the Primary trend remains UP, however these consolidation periods can last for MANY months

 

Indicator: Relative Strength
Relative Strength, saw a dip below “50”, this is not a great look for the Bulls in the market.
Further consolidation in the price chart may dip further below the key 50 level targeting the 30 level.

Indicator: MACD
MACD remains a swing “buy” signal, This week has continues with a further dip in the fast line, only reflecting the slowing momentum.

Black and White Technical Report: The Week Beginning 07/09/2020, FP Markets

Comments from last week: Further consolidation below resistance again last week, this secondary market development will lead to a volatile breakout. Last weeks low closing price within the lower part of the range, only suggests further short term weakness in price within this consolidation zone. Traders should keep in mind the Markets adage, “low volatility leads to high volatility”.

 

XJO DAILY
Price structure:
The daily chart has now set a new “lower high” with Friday closing on the weekly low. Immediate follow through should occur today, with the MAJOR support level shown at 5720 the downside target.


Indicator: Relative Strength
RSI has turned lower again in line with the chart price movement putting in a lower high a signal for further momentum losses as the indicator moves below the key 50 level, and is at risk of again dipping below the key 30 level.

 

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.

Black and White Technical Report: The Week Beginning 07/09/2020, FP Markets

Comments from last week:  The daily chart shows the small 40 point range of consolidation over the past 14 trading days (3 weeks). It should be noted the daily ranges are relatively small including the days where the market closed lower than the open.

 

S&P 500 WEEKLY
Price structure:
A significant liquidity event has taken place in the US leading FANG stocks driving the markets first to a new high below a volatile sell down. The large outside range will take an equally powerful move to overcome either the high or the low of the range. This type of large outside range price movement is often the shock and awe event to mark the high of an underlying price move.

 

Indicator:  Relative Strength Indicator
Relative Strength turning  lower 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 bearish momentum.

Black and White Technical Report: The Week Beginning 07/09/2020, FP Markets

Comments from last week: The S&P 500 has shown a significant breakout bar into a new high, with the closing of the week at the high and the Weekly range being larger than the previous weeks, further gains are expected. This Primary UP trend remains intact. A potential “retest” of the breakout is always possible, this would be the first level of support on any retracement of price in the coming week.

 

S&P 500 DAILY
Price structure:
The Gap open on Wednesday became the bearish signal for a sell watch. Thursday large range provide follow through to Friday’s low. The low found an important support level at 3350, the pivot point low 3 weeks ago. This may considered a bullish support move and will encourage the buyers in the coming week.

 

Indicator: Relative Strength
(From last week: As it indicates very strong price momentum while over the “70” level, it would only take some small period of consolidation for this momentum indicator to roll lower.) Well it only took one day to significantly move the RSI to the “50” level. I would expect this market to consolidate in the coming week, if this takes place the RSI will move lower. Look for an “uptick” in the daily RSI combined with an underlying bullish price pattern to signal the primary trend my be continuing.

Black and White Technical Report: The Week Beginning 07/09/2020, FP Markets
Comments from last week:  Traders are continually looking for a Bear market move in the short term to signal a high in place. This current Daily chart does not display any type of reversal signal. The short term (2 touch) trend line would be the first sign should price move below this level. Of interest is the overnight futures (Asian session) of the Futures market also continues to show very bullish price action around these historically high 3500 levels. Let price show any potential market top, not your twitter feed.

 

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.

The weekly Gold price has closed below the closing price support level of $1939.65 developed over the past 3 weeks, this is a signal the bullish are weakening. Trader would monitor a break of the short term trend line as a sign of further selling.

From a price pattern observation the current structure can be described as a continuation pennant, a breakout higher would be decisive for the buyers and force a potential short cover event.

Indicator:  Relative Strength
Relative strength remains strong but has now turned sharply lower to move below “70”, this can be monitored to remain above the “50” level, as the instrument finds consolidation. Further selling below last weeks low may see a complete loss of positive momentum. 

Black and White Technical Report: The Week Beginning 07/09/2020, FP Markets

Comments from last week: The Weekly chart of Gold is now developing some very good support levels to be monitored in the coming weeks. Closing price support at $1939.65 being the most important. And $2015.0 the first resistance level on any price breakout higher. Last week price range is shorter than the previous week, confirming this consolidation pattern. There is the “pennant” forming, with a retest of the $2072.50 high possible on any breakout move. The statistical outcome table below should be a reminder this Bull run may be over for some time.

 

AUD GOLD DAILY
Price structure:
Australian Dollar Gold price movement do not reflect the underlying USD Gold price as the $AUD continues to hold strength. Taking a combination of weak USD (see below) leading to a higher AUD, the $AUD Gold price will continue to decline. The has significant implication for the larger producer Australian listed Gold stocks. The daily price chart is within an a,b,c corrective movement down, with next support at $2600. 

 

Indicator:  Relative Strength
With the RSI now falling, the crossover of the 50 level is a bad sign upward momentum maybe at an end in the short term. The flag breakdown would see this indicator move further below 50 showing bearish price momentum.

Black and White Technical Report: The Week Beginning 07/09/2020, FP Markets
Comments from last week
: This Daily chart shows the Bear flag breakdown from the retest (6). This price pattern has the potential to breakdown further to retest the $2650 level in coming days. This will continue to place price pressure on Australian producer Gold plays.  Should the market move below the key $2650 level the XAUAUD gold price will enter a primary down trend. Traders would monitor continued strength in the Australian dollar to give an early warning of weakness in this price chart.

 

SILVER DAILY
Price structure:
The daily price of Silver is now trapped between support at $26.18 and Resistance shown at $27.55. This consolidating market can break either way, for a breakout higher significant  bullish news will be required. The current consolidation has both the buyers and the sellers trapped, expect the next move to be volatile.

 

Indicator: Relative Strength:
The divergence signal from 3 weeks ago has played out in the current price decline. With RSI now below “70” but remaining above “50” the bearish flag and current Bullish flag may again simply develop into further consolidation pattern.

Black and White Technical Report: The Week Beginning 07/09/2020, FP Markets

Comments from last week:  Daily Sliver has developed  some important support at $26.18 and resistance at $27.55 levels to be monitored in the coming days. This type of secondary market consolidation can be in play for many months following the volatile decline from the recent closing price high of $29.41 as both the buyers and sellers consider the safety or risk of their positions.

COPPER DAILY
Price structure:
A solid breakout of the inside period of 2 weeks ago, with the range closing towards the high of the week. This type of bar with a longer lower shadow is a sign of weakness to come in the nest 1-2 weeks. A retest of the $2.98 breakout level could be expected prior to an extended move higher.

Indicator: Relative Strength
Relative strength has moved strongly over the 50 level and now 70 level in the past 12 weeks. The higher levels only continue to reflect the current strong upward price momentum.

Black and White Technical Report: The Week Beginning 07/09/2020, FP Markets

Comments from last week:  Probably the most important chart in the world at present for the equity trader interested in commodity producers stocks based around the current Global growth story and more defined in China as the government provides industry stimulus. China now has a substantial “internal” market driving the demand for this material. The Weekly chart highlights the breakout and rejection (FO) from the $2.98 level 2 weeks ago, last week saw an inside period (IP) but with a closing price above resistance, a very good sign of further gains to come. The next significant resistance level is $3.20, and is currently in play.

 

AUSTRALIAN VOLATILITY INDEX
A large jump in XVI volatility value last week as the US markets went into a “long-side” liquidity event. A rise in the XVI displayed last week indicates “PUT” option protection is taking place. This protection is taken to insure against any further downside movement in equity prices. 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 07/09/2020, FP Markets

Comments from last week:   Australian volatility is declining, albeit slowly. Last weeks inside range with a close lower than the open is a good signal for further declines. But this indicator is news and event driven. Long term equity traders looking for the breakout in the Major Australian indices’ should be aware this XVI indicator needs to move lower in the coming weeks to give the Bulls the buying edge.

 

USD DOLLAR INDEX
Price structure:
A spike below the 92.10 saw instant buying enter the market, the US Fed is still playing the potential inflation card.  But a close look at the daily chart with a series of lower highs in place only shows a lack of interest of further buying. This index remains at risk of breaking down below 92.10, look for a daily close below this level as a follow on from the LH? Point.

The RSI noted below suggest upside momentum in the daily bars / candles. This type of momentum should be watched closely for a breakdown to the 30 level.

Black and White Technical Report: The Week Beginning 07/09/2020, FP Markets
Comments from last week:  Friday impulsive move lower to retest the 92.10 level highlights this is the most critical level to monitor in the coming days. A further breakdown will have implications for the FX markets and Gold and Silver in $USD. The key observation on this Daily chart is the lower high now in place below the 93.75 level. A price break below the 92.10 would be a significant development in this market.

 

WTI  CRUDE OIL
Price structure: This commodity is news driven
Last Week: “This low level of volatility will lead to a high level of volatility in this commodity and the underlying energy equities.” Last week saw that volatility play out to the downside, with a large range week taking out the previous 8 week of megre gains. Traders would look for a follow through move in the coming week as momentum is now clearly to the downside. A further capitulation move would see the $29.20 – $30.0 range tested.

 

Indicator: Relative Strength
No signal was provided in the RSI prior to last weeks move, the indicator has quickly moved to the equilibrium level of 50. Further weak price momentum will be evident should the RSI move lower.

Black and White Technical Report: The Week Beginning 07/09/2020, FP Markets

Comments from last week: With a 50 cents range between the open and close of last week, WTI continues the consolidation. The important observation is now the consolidation is above the $42.00 support level. This low level of volatility will lead to a high level of volatility in this commodity and the underlying energy equities.

  • Black and White Technical Report: The Week Beginning 07/09/2020, FP Markets
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