Black and White Technical Report: The Week Beginning 21/06/2021

Black and White Technical Report: The Week Beginning 21/06/2021, FP Markets

Last week the increase in Inflation numbers failed to impress the market, with early week Indices rising across the board, until the US FED reserve released the meeting statement.

The statement could be read that inflation is not “transitory” and the FED acts in interest rates. The market reaction was immediate selling, coupled with the Friday Options expiry, some very sharp moves have occurred.

For the short-term trader this is important, however for the longer term trend follower there is NO evidence of a market top, this may develop in the coming weeks, but without an underlying slowing economy and weaker employment number, the market may remain technically strong.

Primary market moves are sighted in the Monthly / Weekly time frames, Daily charts provide the often-tradeable noise. 

Seasonally the last week of June is a week of declines, this does not change the underlying Primary trend.

Gold, Silver and Copper have moved sharply lower to test important support levels, this coming week will decide if these current support levels will hold.

 

XJO WEEKLY
Price structure:
Last week saw the XJO held on strong Banking stocks, the rejection of the 7406 high may set up a retest of the 7197 level in the coming week. The chart shows 4 weeks of gains from good participation in the top 20 holding the market gains. Price consolidation is an important aspect in trend analysis, consolidation at these levels would set the floor for a renewed push to the 7715 target.

A weekly close below 7197 would target the lower support levels 6900 and 6737. 

 

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 21/06/2021, FP Markets
Comments from last week: 
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.

XJO DAILY
Price structure:
Last Friday posted an OPu, often a marker for a turning point, with Todays futures showing a 70 point + decline on the open the lower support provided by the 5 period simple moving average may provide some first line support towards the close of the day.

A retest and hold of the breakout at 7172 would be a good technical signal.

The level of 7172.0 remains the key support to hold in the coming week in the event of further declines.

 

Indicator:  Relative Strength 14
The reading shows a strong advance in the Relative strength reading, the reading can remain at or over the 70 level for some weeks. A reading over 70 is not a bearish signal, but rather a signal of strong momentum. The current 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 days again on the up-close days. Strong volume would be expected on further breakout signals to confirm Buyer participation. A large volume reading on a decline day would provide a bearish signal. 

Black and White Technical Report: The Week Beginning 21/06/2021, FP Markets
Comments from last week:
 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.

 

S&P 500 WEEKLY
Price structure:
The Weekly chart has posted an outside range (OP) bar, the underlying Primary trend has not reversed, however the OP is a strong marker of market turning points.

3 Weeks ago, the Index showed the #3 line, at the time I mentioned this is often a precursor to a coming decline.

This week the 4046 level and or the 3980 level must hold for support during any further declines.

Price consolidation above 3980 may follow the current reversal signal.

Indicator:  Relative Strength Indicator 14
The Relative Strength Indicator has moved to a divergence sell signal, similar to February 2021.

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 21/06/2021, FP Markets

Comments from last week: 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. 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.

 

S&P 500 DAILY
Price structure:
Last Wednesday’s pivot point reversal first breaking the long term trend line has set the stage for Friday’s sharp decline. Daily price support levels remain at 4062. The underlying trend has not changed; however further consolidation may already be underway between 4062 and 4230.

Indicator: Relative Strength 14
Relative Strength short term has turned lower below the 50 level reflecting the current loss of momentum. With a further swing below the 30 (last seen during October 2020) the underlying price would be monitored for a reversal Buy signal.

Black and White Technical Report: The Week Beginning 21/06/2021, FP Markets

Comments from last week:  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.

USD Spot GOLD – DAILY
Price structure:
From last week: Should price close below the Trendline or the $1863.66 level the sellers would have control:

The Gold price has moved to test the lower support level of $1764 on some impulsive moves.

This is a significant move underway; the chart shows the WEEKLY trend line overlayed intersecting the $1725 support level.

The $1725 level will be a very important level to hold in the coming days and should be monitored for a Buy signal.

Indicator:  Relative Strength 14:
Relative Strength again turns sharply lower in line with the current price weakness and retest of the lower 30 area. The turn in the Relative Strength on Friday may be the early signal for a Bullish divergence signal.

Black and White Technical Report: The Week Beginning 21/06/2021, FP Markets
Comments from last week:
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.

SILVER DAILY
Price structure:
From last week: Friday’s shooting star candle may follow thru in the early part of this week with lower prices.

The observation of support is displayed on this Daily chart with Silver first testing the $27.00 level (Wednesday) and finally closing on the historical support level at $26.00.  ($25.80)

With the impulsive movement last Thursday along with the short cover rally on Friday afternoon, further declines could be expected to test the $24.60 support level.


Taking a wider view Silver remains within a large consolidation area between $24.00 and $28.40.

 

Indicator:  Relative Strength 14
An indication of price weakness is showing in the Relative Strength Indicator (14) as the reading has moved below the 50 level. This type of movement could be expected in this type of price consolidation.

The divergence sell signal had first technically failed, however remained the precursor to the current decline. 

A full bearish signal will be displayed with RSI moving below the 30 level and would be monitored for a Buy divergence signal.

Black and White Technical Report: The Week Beginning 21/06/2021, FP Markets

Comments from last week: The daily chart of silver continues to trade within the current range of $27.0 to $28.40. 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.

AUD GOLD DAILY
Price structure:
Following the decline in the USD Gold price and the somewhat stable $AUD the XAUAUD price has fallen below the Bullish flag structure. Friday’s IP inside range shows the market in balance, so a breakout either way will give an indication of market direction.

Support shown at $2300 will be important to hold in the coming days on any further price weakness.

Indicator:  Relative Strength 14
RSI has moved below the 50 level in line with the declining price action, this is now a bearish signal given the underlying price action is declining on expanding daily ranges. Last Friday’s uptick in the indicator is important and will be monitored for a further bullish signal, eg a rise above the key 50 level.

Black and White Technical Report: The Week Beginning 21/06/2021, FP Markets

Comments from last week: 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.

COPPER DAILY
Price structure:  Inventories remain historically low as the Chinese release stockpiled product.
Last week’s move in Copper is regarded as an impulsive move (large range) falling below the Gap window of 8 weeks prior.

The current movement has also broken the short term trendline.

This week the $4.00 support level is now in play, traders should monitor for this level to hold. A further price break of $4.0 would put Copper into a “corrective” move with $3.80 as the next target.

 

Indicator: Relative Strength 14
Confirmation of a loss of momentum is shown when the RSI moves below the “70” and now testing the 50 level,a further movement below 50 signals a loss of positive momentum and subsequently requires a signal above the 50 level to signal positive momentum.

The highlighted level in red has become the sell signal

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 positive price momentum.

Black and White Technical Report: The Week Beginning 21/06/2021, FP Markets

Comments from last week: 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.

AUSTRALIAN VOLATILITY INDEX
The underlying Volatility remains steady below the key 13 level, traders should monitor these levels as an indication of market sentiment.

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 21/06/2021, FP Markets

Comments from last week: 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.

USD DOLLAR INDEX
Price structure:
Impulsive! playout in the USD following the Federal reserve press conference. Without regard for resistance levels this primary movement has the potential to retest the 93.45 level.

Indicator:  Relative Strength 14:
While the RSI has made a sharp recovery above the key 50 level and 70 level in line with the now 5 impulsive up bars within the last 14-day period.bFriday’s shorter-range bar is a sign some price consolidation may occur at this level.

Continued strength may see a weaker $AUD.

Black and White Technical Report: The Week Beginning 21/06/2021, FP Markets
Comments from last week:  Following Thursday’s benign inflation print the $USD Index has set an impulsive bar to close at a 3 month high below 90.85.

WTI CRUDE OIL
Price structure:  This commodity is news driven by supply -demand.
The West Texas contract remains positive with a new higher low and higher high during the past week. 

The first observation will the continued support of the short term trendline.

Resistance shown at $75.20 remains the preferred target, however consolidation above $66.00 support level the potential outcome following 4 weeks of gains.

 

Indicator: Relative Strength 14
RSI turning higher over the 70 but with a lower print, this may be the early Bearish divergence signal.

Black and White Technical Report: The Week Beginning 21/06/2021, FP Markets

Comments from last weekLast 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.

  • Black and White Technical Report: The Week Beginning 21/06/2021, FP Markets
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