Black and White Technical Report: The Week Beginning 15/02/2021

Black and White Technical Report: The Week Beginning 15/02/2021, FP Markets

XJO WEEKLY
Price structure:
Over the past 3 weeks two outside periods (OP’s) have occurred. This type of price action has a very high occurrence of marking the high or low turning point in price movements. As this Index has moved over 500 points from the November 2020 (HL) this area may be the turning point for some form of retracement.

Last week’s small range shows the buyers may be unwilling to pay higher price for the underlying equities. A time of caution for the longs with potential for the Sellers to move the market lower.

6737 remains a key level to hold in the short term.

 

Indicator: Relative Strength
The RSI indicator has remained over the key 50 level, last week turned lower, a sign of changing price momentum. 

A bearish divergence is developing within this momentum indicator.

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.

Traders should notice the faster average (orange) is now flat and may swing to a sell signal.

Black and White Technical Report: The Week Beginning 15/02/2021, FP Markets

Comments from last week: Last week set a large range Outside period up close (OPu), with the low breaking the trend line before prices responded higher to set a new high. This second OP in 2 weeks highlights how undecided the market is about this current Bullish trend.

The two OP ranges have an extremely high correlation to marking a market top within the next 3 periods. To confirm this, a further closing price below last week’s low of 6517 would be required.

The event of RBA providing QE into this market can make reversal signals difficult to work with. BUT trader sentiment may change on a breakdown of support levels, the most important at the moment is 6430. 

 

XJO DAILY
Price structure:
With last Monday making a new high and the following Friday making the low for the week, the Daily price movement remain unconvincing of further gains in the short term.

The current structure could be maked as a bullish flag pattern and may lead to a breakout higher. The current key level to break through higher is 6837.

In the short term a retest of 6765 is underway, for the market to remain Bullish this level must hold in the coming days.  

 

Indicator:  Relative Strength
With RSI making a series of lower higher recently and now tracking towards the 50 level, a cautionary view of market momentum should be held.

 

Indicator:  VOLUME
V
olumes are declining in this small pattern and should indicate a lack of volume selling and give indication of buyer consolidation prior to a move higher.

Black and White Technical Report: The Week Beginning 15/02/2021, FP Markets
Comments from last week:
 A new Daily price support level has emerged at 6765 with the daily resistance high from 25/01/2021 shown at 6837. 

Last Friday’s close over this level remains a positive signal for further gains. 

A large range week with a test reject at 6510 can provided the spring to ultimately test the February 2020 high of 7160 points.

Price range volatility is increasing, traders should be taking advantage of the volatility with precautions taken on position sizing in the market.

S&P 500 WEEKLY
Price structure:
The outside period of 3 weeks ago remains in play as the Relative strength Indicator continues to show a loss of momentum.

The S&P 500 is at risk of profit taking as last weeks range remained short compared to the previous two weeks. An unwillingness of the buyers to pay higher price is now stating to show.

Primary Trend remains UP.

  

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 and continues to play out.

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 15/02/2021, FP Markets

Comments from last week: Last week posted a strong range to close at a all time high, it should be noted the Relative strength indicator has not confirmed the advancement as a bullish move.

It should be noted the market is in a “high place” and at risk of profit taking, first key level on any retracement will be 3725 and 3600 remains the key support level for any significant retracement.

 

S&P 500 DAILY
Price structure:
Last week closing on the high of the week and with a shortened week ahead, this high price area can potentially lead to some profit taking. A successful retest and hold of the 3872 level would be very bullish for further gains. Traders should monitor this level as a level to hold on any price retracement that may lead to further declines.

 

Indicator: Relative Strength
Relative Strength short term has turned higher from the decline below 50 level, it is a measure of immediate stronger price momentum and signals and extended move may be ending as price sets a new high on weaker momentum.

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

The RSI should be monitored for a movement and close 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 15/02/2021, FP Markets

Comments from last week:  The daily chart of the S&P 500 contains a GAP followed by the new all time high on Friday.

Last Friday notably a short range bar, and potential the exhaustion following the 5 day price rise.

 

USD Spot GOLD – WEEKLY
Price structure:
USD Gold remains in a Primary down trend, last weeks price bar again retesting the $1855.0 level before closing towards the lows.

A potential retest of $1764.0 is a very high probability in this market.

There is nothing bullish in this chart. However it remains highly tradeable in shorter time frames.

 

Indicator:  Relative Strength
Relative Strength turns higher and fails to cross 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 15/02/2021, FP Markets
Comments from last week: Gold continues to find significant resistance at the $1855.00 level, last weeks large range shows sellers in control with a close below the 1826 midpoint support level (now negated)

The key level to hold in the coming week is $1764.00, a break of this level may see a further downside extended move underway.

AUD GOLD DAILY
Price structure:
Strength in the Australian dollar and a declining USD Gold price has set the AUD Gold price at a 9 month low, following Thursdays decline from the developed Bearish flag pattern.

2288 remains the current target.

This will continue to play out against the local producers.

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 15/02/2021, FP Markets

Comments from last week: A new daily low closing price remains within the thesis the price should retest the January 2020 level at $2288.0. 

A Primary down trend remains in place without evidence of a base forming as last Thursday’s large range shows the seller in control.

This is a bearish picture for Australian producing Gold plays NCM EVN NST RRL.

SILVER DAILY
Price structure:
The $26.00 level continues to hold Silver as the midweek retest of $27.70 has also taken place.

Friday’s bullish close is a good signal price momentum may be turning higher inside the developing Bullish flag pattern.

A breakout over $27.70 would be a very strong signal for a retest of the recent $30 high set 2 weeks ago. 

Silver remains highly tradeable in these volatile price movements. 

 

Indicator: Relative Strength
Relative Strength has turned higher and has remained above the 50 level, operating in line with the underlying price movement a good signal for further improvement in price momentum at this 50+ level.

Black and White Technical Report: The Week Beginning 15/02/2021, FP Markets

Comments from last week: Last week Silver showed its true colours as the metal spiked higher on media news, and sellers immediately entered the market at the August 2020 highs to set a “fake out” bar. The follow through lower set the metal back to the $26,00 level.

What should be noted here is the Daily closing price remains above this level. Further consolidation could be expected at this support level. Silver remans highly tradeable in these volatile price movements.

COPPER DAILY
Price structure:  Inventories under pressure.
Last week’s “impulsive” move has taken out a potentially strong resistance level at $3.80.

This type of impulsive price movement has a high probability of continuing with a retest of 2012  $4.00 highly likely.

Consolidation of price should hold above the $3.80 level on a daily basis.

The Primary Trend remains up.

 

Indicator: Relative Strength
Relative Strength has moved towards the 70 level. 

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 $3.70 level and the RSI moves further lower below the 70 level.  

Black and White Technical Report: The Week Beginning 15/02/2021, FP Markets
Comments from last week:
 The Weekly chart of Copper remains VERY bullish as the current flag pattern  begins to breakout higher. A further move toward $3.80 remains the best play. The retest low set 2 weeks ago at $3.47 offered the seller opportunity to take the price lower. This is a very bullish chart displaying a primary UP trend.

 

AUSTRALIAN VOLATILITY INDEX:
The XVI value now shows an 8 week closing high, with the potential for a retracement in Index values the cost of PUT insurance is increasing.

 A further higher reading in the coming week will show as further pressure on 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 15/02/2021, FP Markets
Comments from last week:
 The XVI responding to daily news has kept the indicator above the 13 level for the early part of 2021. 

A move below the 13 level would show a decrease in forward volatility premiums  (insurance PUT Option pricing)

The XVI remains elevated but seems to favour the move closer to the 13 level.

USD DOLLAR INDEX
Price structure:
The most important chart in the world as a driver of commodity prices and a reflection of the cost of money (interest rates) and potential forward inflation.

It remains significant the DXY value has not traded over 91.66 last week, with a sharp retracement to settle below the 90.66 level.

The price chart is now at an important juncture where a new high over 91.66 must be made for the developing Primary UP trend to remain intact.


Indicator:  Relative Strength
While the RSI has again moved lower below the 50 level, the indicator remains a signal of strengthening price momentum only when 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 15/02/2021, FP Markets

Comments from last week:  The bigger picture in the DXY is of a base forming with the potential to breakout into a Primary UP trend. In the single bar analysis rejection at 91.66 has been set with an OP (outside period) at this critical level. 

Scenario 1. A bull trap, the response is often a sharp decline.

Scenario 2. A simple back test of 90.66 would a very bullish level to hold.


WTI CRUDE OIL
Price structure:  This commodity is news driven by supply -demand.
Another good week for the price of WTI as a break way of the $50.50 level continues.

The weekly chart shows $66.00 remaining as the historical resistance level and potential price target.

With 2 weeks of strong price movement some consolidation may be expected at the $61.80 level in the coming weeks.

The next target remains $61.80.

The new support level remains $50.60

 

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 remains over 70, this should also be monitored for a potential divergence signal.

Black and White Technical Report: The Week Beginning 15/02/2021, FP Markets
Comments from last week
: From 3 weeks of consolidation to a very bullish breakout in the direction of the underlying Primary trend. Last weeks impulsive price move has followed on from the very strong movement of 5 weeks prior. A very good move to set the tone for higher prices.

  • Black and White Technical Report: The Week Beginning 15/02/2021, FP Markets
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