Black and White Technical Report: The Week Beginning 21/12/2020

Black and White Technical Report: The Week Beginning 21/12/2020, FP Markets

A strong run into the pre Xmas period may see equity markets setup for consolidation of the current gains.

 

The slight jump in the XVI also suggests some protection is being priced into the Equities market.


West Texas Intermediate continues to move higher towards $50.00bl.

 

In Gold the close above $1855.00 is a very strong signal for further gains, along with Silver also poised to move higher from a trading price channel following some exponential gains last week.

 

BTC continues to set new highs giving some insight a risk on event of metals and crypto prior to Xmas.

 

XJO WEEKLY
Price structure:
Last week marks the 3rd attempt to cross 6740 resistance level. The bearish #3 bar seems to be playing out. Without an immediate move higher the market is at risk of further consolidation under this important resistance level.  Should the market close over 6740 a retest of the 7197 point level would be imminent.

Primary Trend remains UP.

 

Indicator: Relative Strength
The RSI indicator has remained over the key 50 level, however now showing a slowing advance as the indicator rolls further sideways. 

Combined with the Fake out signal in the chart, consolidation remains the preferred outcome. But overall the RSI remains a very good signal of Weekly improving price momentum.


Indicator: MACD
MACD has moved to a swing buy signal, again this highlights how slow this indicator can be in a fast market. It should be acknowledged this indicator is very slow to react on a weekly basis and may continue to track sideways in the coming weeks as it did during 2019.

Black and White Technical Report: The Week Beginning 21/12/2020, FP Markets

Comments from last week: Two weeks ago, the Weekly chart of the XJO showed a Candle#3 this type of WEEKLY price action is usually a warning of price weakness 2 weeks in advance. Last week we saw rejection from the 6740 level to see the market close on the lows of the week. Following a strong run up to this level some consolidation would be expected. 6430 remains support for the coming weeks.

 

XJO DAILY
Price structure:
The “pipe reversal” a very strong short term signal for reversal is now in place. The daily chart of the index is now developing a consolidation range between 6510 support and 6730 resistance.  Should further price action develop into a “bearish rising wedge” ultimately a retest of the 6056 level would be in play.

 

Indicator:  Relative Strength
Last week this signal was developing, this week confirms the Relative strength has further developed a Bearish Divergence signal, the price has set new closing price highs without the RSI setting new highs.

 

Indicator:  VOLUME
During the September October period volumes on down days increased and decreased on UP days showing a lack of interest for any accumulation. The pattern has re-emerged of increasing volume on down days.

Black and White Technical Report: The Week Beginning 21/12/2020, FP Markets

Comments from last week:  The daily the new high made last Wednesday followed by a sharp reversal, this type price action has the ability to shake the buyers with profits being locked in. The Daily chart shows the short-term support level at 6510, this should be monitored in the coming days, a break of this level may lead to a sharp price movement lower.

S&P 500 WEEKLY
Price structure:
The price range “low to high” of the Weekly chart are getting shorter, although a new high has been made, the lower shadow of the weekly bars last week and the week prior indicate “selling without urgency”. The S&P 500 may have a short term top in place. The first support in retracement is 3400. The underlying Primary trend remains UP, as the chart displays 7 weeks of advancement without a meaningful retracement.

 

Indicator:  Relative Strength Indicator
Relative Strength remains above the key 50 level and currently is a good signal of continuing price momentum, however the current turn lower is not a bullish sign in this ongoing trend.
The RSI now needs to continue to move towards the 70 level as a signal of strong momentum.
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 21/12/2020, FP Markets

Comments from last week: Last week did not see follow through from the late November push higher. From the last pivot reversal the weekly ranges have become shorter indicating a lack of conviction from the buyers. 3400 remains the key support level should price weakness set a reversal pattern. Relative strength remains above the key 50 level and currently is a good signal of continuing price momentum, however the current turn lower is not a bullish sign in this ongoing trend.

S&P 500 DAILY
Price structure:
Last Friday’s OPd (outside range) is a high potential marker of a turning point within the next 3 trading days. Support at 3580 would the target area in a retracement move. 

This is not a signal for a bear market, however markets do need to retrace and find support  to confirm the sellers are done.

 

Indicator: Relative Strength
Relative Strength has turned lower, within the structure of the RSI there remains the clear signal for Bearish divergence signal to develop as the index has made a new high, however the RSI should be monitored for a movement below the key 50 level as a loss of upward momentum to confirm divergence.

Black and White Technical Report: The Week Beginning 21/12/2020, FP Markets

Comments from last week:  The daily OPd (outside range) has a high degree of marking turning points following an extended move. Last Friday saw the “gap” closed. This is the decision point for the Index, 3580 remains the key support level on further price weakness. There is nothing Bullish about the current price structure and traders should consider a top may be in. While the market is currently news driven around a vaccine, momentum is currently waning and may lead to further declines.

 

USD Spot GOLD – WEEKLY
Price structure:
A very strong outside range last week sets the course for higher prices. 

The close above $1855.00 is a very strong signal for further gains as the range of the down close bar that tested $1764 has been overcome with a close last week over the high.

It could be considered the a,b,c corrective move is complete as last weeks bar confirms a pivot point reversal. Resistance remains at $1970.

 

Indicator: Relative Strength
Relative Strength turns higher and crosses the key “50” level. This is a key indicator of “positive” price momentum, a continued move high would show higher positive price momentum.

Black and White Technical Report: The Week Beginning 21/12/2020, FP Markets

Comments from last week: In the immediate, Resistance $1855.00 and Midpoint support shown at $1811.00 key levels to watch in the Weekly chart. Current rejection is indicating lower prices ahead and consider should the $1764.0 level break traders would be forced to exit on Stop adding to the interest from Short selling. Gold remains in a Primary down trend. The long-term trend line remains to price target at $1650.0.

AUD GOLD DAILY
Price structure:
An improvement in price, however the structure remains as a bearish flag with the potential to break down for a retest towards the $2400 level.

This will limit potential upside for Australian Gold producers in the near term.

Smaller Gold plays remain dependant on news flow and drilling results.

 

Indicator:  Relative Strength
With the RSI turning higher but remains below the key 50 level showing improving momentum. 

This indicator has swung around below the 50 level since August. 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 21/12/2020, FP Markets

Comments from last week: This price chart of Gold in Australian dollars remains under pressure as the $AUD continues to climb higher. Local Gold producers will remain under price pressure as margins are reduced on the falling AUDUSD. $2390 remains the key support level in the coming week.

SILVER DAILY
Price structure:
From a potential breakdown to strong rally to retest the $26.00 level. The short range from last Friday shows light selling. Silver has the potential to break through this $26.00 level to test next resistance at $27.70. A further breakout of this consolidation range target $30.0

Indicator: Relative Strength
Relative Strength has turned sharply higher in line with the underlying price movements, a good signal for further momentum gains.

Black and White Technical Report: The Week Beginning 21/12/2020, FP Markets

Comments from last week:  During the past week Silver set a new Lower high. The expectation is for a retest of the lower pivot reversal level around the $22.30 level. Overall Silver remains within a trading range without any momentum signal form the Relative strength indicator. A retest of the lower trend line seems evident in the coming days without any new catalyst to drive the price higher.

COPPER DAILY
Price structure:  Inventories under pressure.
The continued strong momentum move in Copper targets $3.80.

Last week high close suggests immediate follow through the lower shadow of the last Candle may considered the “retest” of the breakout.

However this is an extended price move following 7 weeks of price gains. Traders would look for a short retracement to potentially retest the $3.47 level again. 

 

Indicator: Relative Strength
Relative Strength has moved over the 70 level again underlying the strong momentum move underway. An early BEARISH divergence signal has failed, this will still be monitored in the coming week. Further confirmation of a top will be shown if price moves below last week’s low around $3.48 and the RSI moves lower inline. 

Black and White Technical Report: The Week Beginning 21/12/2020, FP Markets

Comments from last week:  A sensational move in Copper coming to an end above the $3.47 level, this level needs to hold in the coming days. Last Friday’s price bar is showing indecision. Traders would look for a close below Friday’s low to signal reversal of price with a potential retest of $3.30. A successful retest of this level would be a very bullish signal for further gains in the coming weeks.

AUSTRALIAN VOLATILITY INDEX:
The rise in underlying Volatility keeps the Cap on immediate gains in equities as forward risk is now being priced in.

While 15.29 is not an extreme measure, the observation is that the price of risk cover (forward PUT Options) is rising on buyer demand.

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 21/12/2020, FP Markets

Comments from last week: Volatility levels are returning to pre COVID-19 levels and a level consistently BULLISH for equities as the forward price for risk cover declines. The current level can be seen as the initial breakout level from the Covid 19 pandemic alert. With the past week again dipping below the important “13” level, this remains very supportive of further equities market gains.

USD DOLLAR INDEX
Price structure:
Again key support of 90.66 has broken in this continuing $USD Bear market. To see any revision in direction a close over 90.66 is required with a continued move towards 91.66 to confirm.


Indicator:  Relative Strength
A complete breakdown of the Relative Strength to move lower below the “30” level, the current swing lower is a significant implication for further price weakness. Traders would look for an RSI move over the 50 level to suggest a momentum move higher is underway, this is unlikely.

Black and White Technical Report: The Week Beginning 21/12/2020, FP Markets
Comments from last week:  Here we are at KEY support for the USD, last week saw several lows along the support level from 2018. A very good sign of potential gains in the short term. First level to monitor is a retest of 92.10

The Primary trend for the USD remains down and will remain down should the above retest occur.

WTI CRUDE OIL
Price structure: This commodity is news driven by supply – demand.
West Texas Intermediate remain in a continued move higher to test the $50.60 level
As the Weekly chart has made new highs over the $42.00 level, WTI enters a new Bull market phase. A further Weekly close over the $50.60 level would put the $61.80 resistance level in play.

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.
As the indicator is now over 70, this will be monitored for a potential divergence signal.

Black and White Technical Report: The Week Beginning 21/12/2020, FP Markets

Comments from last week : WTI has entered a Primary UP trend with the first real test to reach $50.60. Last week saw some indecision again as the US locks down during the current Covid spread with the potential to increase storage inventory levels.

  • Black and White Technical Report: The Week Beginning 21/12/2020, FP Markets
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