Black and White Technical Report: The Week Beginning 14/06/2021

Black and White Technical Report: The Week Beginning 14/06/2021, FP Markets

Inflation numbers reported last week returned became non-event for the markets with all technical support levels holding and Indices continuing to advance.

This highlights the important distinction of waiting for technical reversal signals before making trading decisions.

Within the Australian and US Indices we monitor the early stage of Bearish Relative strength divergence as momentum comes into balance.

As Gold, Silver and Copper continue to range trade, with no clear reversal signal within the Primary UP trend, these markets are monitored for a breakout higher.

XJO WEEKLY
Price structure:
Last week shows a very short range bar as the market comes into balance above the 7200 level. It is important to note that no immediate selling has taken place at this breakout level. 

The 7715 price target remains in place.

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 14
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 14/06/2021, FP Markets

Comments from last week:   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.

XJO DAILY
Price structure:
With the early and only potential RSI divergence signal, the Daily bars can be seen overlapping each other, sign of a secondary consolidation taking place. This is not a topping pattern without a clear breakdown. (Always hindsight) The Daily price action should be monitored for a closing day below the 5 SMA as the first sign of a weaker market. As the Weekly (above) chart remains within a primary up trend, daily price movement can retest the breakout level shown at 7172.0. A close below this level would be the first significant bearish signal.

 

Indicator:  Relative Strength 14
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. The intermediate “dip” below the 70 level with a move back over this important level sets up a potential divergence signal. 

 

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

Black and White Technical Report: The Week Beginning 14/06/2021, FP Markets

Comments from last week:  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.

S&P 500 WEEKLY
Price structure:
The S&P appears to be in a Weekly grind higher, although at an all time closing high, lack of conviction is showing in the short range weekly price bars. The Pivot reversal of 2 weeks ago continues to provide the swing base signal required for a higher market. The first major support level remains at 4114.0. The same type of price action can be seen in the RUT and NDX markets with strong support at recent lows.

Indicator:  Relative Strength Indicator 14
The RSI observation remains the key signal and is currently reflecting stronger price momentum as the indicator moves back to the 70 level but a lower reading is evident than the May peak, with the market at a new high not confirmed with the RSI, it can be read as a bearish divergence signal. (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 14/06/2021, FP Markets
Comments from last week
: The retest of 4046 is complete. The S&P has set a new Bullish Pivot point following last Thursday 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.

S&P 500 DAILY
Price structure:
The first and most important level currently in the S&P is the recent resistance level shown at 4230, For short term traders this level is critical to hold in the coming days. The S&P is trading within a range from 4062 – 4230, any immediate reversal from the current high would be viewed as a “bull trap” and would first see the current trendline challenged, with the potential to retest the internal support level of 4182. However, the primary trend remains UP without evidence of a reversal.

Indicator: Relative Strength 14
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 and potential cross of the 70 level. 

Black and White Technical Report: The Week Beginning 14/06/2021, FP Markets

Comments from last week:  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.

USD Spot GOLD – DAILY
Price structure:
Gold continues to range trade between $1863.66 and $1916.40. Should price close below the trendline or the $1863.66 level the sellers would have control of price for a potential retest of the $1797.0 level. This is not the favoured observation within the current Primary UP trend. A price breakout of the $1916.40 level would target $1966.80 where profits would be taken.

Indicator:  Relative Strength 14
Relative Strength again turns sharply lower in line with the current price weakness and retest of the lower area of the trading range. No divergence signal is shown.

Black and White Technical Report: The Week Beginning 14/06/2021, FP Markets

Comments from last week: 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.

SILVER DAILY
Price structure:
The daily chart of silver continues to trade within the current range of $27.0 to 428.40. Friday’s shooting star candle may follow thru in the early part of this week with lower prices. The price chart has no directional price movement showing, but momentum is changing. The large range bar from 2 weeks ago continues to hold the price action in consolidation. 


Indicator:  Relative strength 14
A indication of price strength is showing in the Relative strength Indicator (14) as the reading has moved over the 50 level. This type of movement could be expected in this type of price consolidation. The divergence sell signal has failed with price moving higher. A full bearish signal will be displayed with RSI moving below the 50 level.

Black and White Technical Report: The Week Beginning 14/06/2021, FP Markets

Comments from last week: 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 Thursday’s sell down the overall picture for Silver remains bullish with $28.0 being the current mean level to trade over and hold.

AUD GOLD DAILY
Price structure:
The Bullish flag has developed into a breakout signal, with last Thursdays “hammer” bar. Buyers must now take this higher to affirm control. The two moving parts of this chart are the USD Gold price and the $AUD. A weaker $AUD below .7760 will see a stronger AU Gold price and support for the local producers. Price resistance at $1900 remains the preferred target in the short term. The smaller Australian speculative explorer stocks will remain news dependant.

Indicator:  Relative Strength 14
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 14/06/2021, FP Markets

Comments from last week: 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.

COPPER DAILY
Price structure:  Inventories remain historically low.
Consolidation continues the Weekly chart of Copper with $4.50 developing as the significant support level to hold. The $4.61 all-time high level from 2018 is again showing resistance at this level last week. However, this type of secondary consolidation remains very bullish for further gains. Last week showed a short price range for the week as the market settles into balance.

Indicator: Relative Strength 14
Confirmation of a loss of momentum is shown when the RSI moves below the “70” level and below the internal low set during February. The highlighted level in redThis 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 positive price momentum.

Black and White Technical Report: The Week Beginning 14/06/2021, FP Markets

Comments from last week:   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.

AUSTRALIAN VOLATILITY INDEX
As the US markets VIX declined the Australian XVI also collapsed back below the 13 level. This remains a good signal for further gains in the equities markets as the price of risk cover declines. 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 14/06/2021, FP Markets

Comments from last week: 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.

 

USD DOLLAR INDEX
Price structure:
Last week the DXY was expected to retest the 89.64 level. Following Thursdays benign inflation print the $USDIndex has set an impulsive bar to close at a 3 month high below 90.85.

Indicator:  Relative Strength 14
While the RSI has made a sharp recovery above the key 50 level inline with the now 2 impulsive up bars within the last 14 day period. Friday’s outside range bar is a significant change development for the Bullish side of this Index. As yet there is no trend change, only a breakout above 90.85 would usher in a trend change signal. Continued strength may see a weaker $AUD, stronger AUDXAU (see above).

Black and White Technical Report: The Week Beginning 14/06/2021, FP Markets
Comments from last week:  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.

WTI CRUDE OIL
Price structure:  This commodity is news driven by supply -demand.
Last week showed a good follow on price movement for WTI with the current breakout continuing a target of $75.20 the July 2018 resistance level is now in play with key support remaining at $66.00. The current trendline is now confirmed, traders would monitor price around this rising trendline for indications of strength or weakness. Australian Oil producer WPL uses the Brent contract price also trading at a 2 ½ year high price of $USD 72.70. Traders could reflect on the fact that a high Oil price not a bearish signal for equity markets.

 

Indicator: Relative Strength 14
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 14/06/2021, FP Markets

Comments from last weekWTI 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.

  • Black and White Technical Report: The Week Beginning 14/06/2021, FP Markets
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