Black and White Technical Report: The Week Beginning 22/03/2021

Black and White Technical Report: The Week Beginning 22/03/2021, FP Markets

Bond yields continued to keep volatility slightly elevated in the equities markets leading to short declines. 

US markets have been buoyed with stimulus checks going to every household, while the Australian XJO200 market continues into a 3-month consolidation between 6500 and 7000 points. 

On the move behind the scenes are the small resources in particular Gold and Silver listings. This week I have included the Australian GDX chart showing early sign of Bullish reversal.

Gold closes at a 15-week high, as Silver clings to the $26.00 support resistance level.

 

XJO WEEKLY
Price structure:
The XJO200 continues to consolidate around the 6737 level, the tentative trendline drawn some weeks ago has broken with a new tentative line drawn.

Primary trend remains UP.


Economic news will be the ultimate decider for direction, but the underlying primary trend remains UP. The OPd of 5 weeks ago has not followed through with lower prices and may be disregarded. 

Last week closed towards the low and may follow lower thru early this week.


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

The RSI 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 Sell signal, 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 turning down and may swing to a sell signal.

Black and White Technical Report: The Week Beginning 22/03/2021, FP Markets

Comments from last week: Solid consolidation around the 6737 continues to develop, while the Daily volume profile suggests distribution, current price action remains trading in small weekly ranges without commitment from the Buyers or the sellers.

7130 remains the upside target.

This current 6737 shall remain an important level to hold in the coming week.

First support level 6430.

Heavily weighted into the Index are the 4 pillar banks with CBA the largest, followed by CSL BHP. Currently all of the largest weighted stocks remain in Primary UP trends.

 

XJO DAILY
Price structure:
The daily support level of 6655 was again tested last week, following the test and reject of 6837 level. The current price movements set a 3 black crow pattern, which is described as a bullish pattern.
Last Fridays low also retested the pivot reversal lows, highlighting overall weak price momentum.

An early retest of this level could be expected this coming week, this level must hold to keep a short-term bullish outlook.

 

Indicator:  Relative Strength
With RSI making a series of lower highs recently and a failed push back over the 50 level, remains tracking below the 50 level, setting a bearish momentum signal, which also remains in line with the neutral consolidation price action, a view of higher market momentum should continue to be held.

 

Indicator:  VOLUME
Overall volume is increasing as price declines, Friday high volume was set on the Options expiry wash through of stock.

Black and White Technical Report: The Week Beginning 22/03/2021, FP Markets
Comments from last week:
 The developing Daily support level of 6655 was again tested last week with an immediate reaction higher towards 6837.

The daily chart displays a significant consolidation pattern developing from last November 2020.  

Friday’s price action confirmed a “pivot point reversal”, continuation should be expected in the coming week.

 

S&P 500 WEEKLY
Price structure:
The bullish pivot reversal remains in play, although a strong follow through higher has not come to pass. 

3725 remains the key level to hold in the coming week / weeks. 

 

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 remarkably similar to the Jan Feb 2020 divergence.

RSI is currently reflecting slower momentum as consolidation takes place, a movement below the 50 level would signal strong bearish price momentum.

It should be acknowledged the RSI has also remained above the 50 level for the past 12 months.

Black and White Technical Report: The Week Beginning 22/03/2021, FP Markets

Comments from last week: The S&P has set a new Bullish Pivot point with last weeks close in the top part of the overall range and a record closing value. 

The 3725 has been successfully retested, this level will remain a key level to hold in the coming week.

The expectation is for a continuation to higher prices in the coming week.  This will reflect in the RSI reading (see below).

 

S&P 500 DAILY
Price structure:
The OPu (outside period up close) has marked the high with the follow through to the lower retest of the 3872-support resistance level. 

A possible retest of he trendline may be underway as the current Bullish flag pattern develops. Fridays equal open/ close shows balance, the so next price move will be decisive.

Technical traders would look for a pivot point to be completed to remain buyers.

The Primary trend remains UP.

 

Indicator: Relative Strength
Relative Strength short term has turned BEARISH with a turn below 50. The RSI should be monitored for a movement and continuing close below the 50 level and further move above this key 50 level as upward momentum may gather pace out of the bullish flag pattern.

Black and White Technical Report: The Week Beginning 22/03/2021, FP Markets

Comments from last week:  Continued higher daily closes equals strong price momentum. While Bond market news flow continues to discount the prospect of higher prices the Index pushes on.

Friday’s inside day is an important signal for Monday’s trade as the market seems in balance. A closing price higher may signal overall higher prices for the coming week.

USD Spot GOLD – DAILY
Price structure:
This week I use the Daily chart which highlights the importance of the short term trend line, and the current retest close to the resistance level of $1764.30 as this may be the determining factor in the coming days. 

This is an important development following the decline in price from the January 2021 high from the $1966.80 resistance level.

 

Indicator:  Relative Strength
Relative Strength turns higher and fails to cross the key “50” level. This is an early signal of changing momentum and should be monitored for a close above the 50 level.

Look for a continued upturn in the RSI to confirm any potential price rally getting underway.
 Black and White Technical Report: The Week Beginning 22/03/2021, FP Markets

Comments from last week: The long-term trend line now confirmed as valid (3touches) has given immediate support to the recent weekly declines.

This coming week a retest of $1764 will give traders a clearly defined signal of support with a close over this level.

Although Gold remains within a Primary down trend this can be viewed as an early signal price has found some support.

AUD GOLD DAILY
Price structure:
A weaker $AUD has added to the gains in the AUDXAU price the high close on Friday is a good signal for further gains as this also completes a pivot point reversal.

This is particularly important for the local Australian producers as potential profit margins begin to expand. 

There is considerable resistance to overcome, in particular the $2288 level, however this is now heading in the right direction for local producers.

NCM, NST, SLR, RRL and SBM.

Indicator:  Relative Strength
With the RSI turning higher from below the key 30 level showing a changing momentum. 

The bullish divergence signal did not develop, but this momentum indicator can now be monitored for a continued move above the 30 level.

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 22/03/2021, FP Markets
Comments from last week: The Australian Dollar Gold price chart has also displayed some important reversal signals in the past week.

The 3 Bar reversal with he unbroken low has a high statistical outcome for marking a turning point following a previous decline.

The AUDXAU remains within the definition of a Primary down trend, however this is an important signal for early entry traders into the Australian listed Gold producers.

NCM, NST, SLR, RRL and SBM.

 

AUSTRALIAN GDX  ETF
Price structure:
The Australian listed GDX (Gold producers) ETF has set a 3-bar reversal pattern in this weekly chart. Last week followed through higher but not decisively. 

This chart is displaying an early bullish signal as price momentum is swinging to the higher side evidenced by the upturn in the RSI and the MACD crossover Buy signal (crossover below the “0” level)

Historically the $41.30 has been a key level with a retest of this level again 3 weeks ago. 

Black and White Technical Report: The Week Beginning 22/03/2021, FP Markets

SILVER DAILY
Price structure:
The 3-bar reversal pattern of 3 weeks ago continues to hold as price consolidates around the $26.00 level.

Traders would monitor this for a decisive close below the $26.00 level as a bearish signal, however the current view following the 3 Bar pattern and the pivot reversal 2 weeks ago is for a breakout higher

Indicator: Relative Strength
Relative Strength has turned lower below the 50 level, operating in line with the underlying consolidating price movement. A good signal for further improvement in price momentum would be a move above the 50 level.

Black and White Technical Report: The Week Beginning 22/03/2021, FP Markets

Comments from last week: In line with other precious metals charts Silver has also presented a significant reversal signal as the $26.00 support / resistance level is reclaimed.

Last week saw a Bullish pivot reversal set.

Silver remains within a large consolidation phase, however this current 3 Bar price action with the pivot demands traders take notice of a potential resumption of the Primary UP trend.

 

COPPER DAILY
Price structure:  Inventories under pressure.
Copper remains within a tight consolidation zone above the key $4.00 level.

The test reject of 2 weeks ago remain in play for higher prices.

The early signal of weakness may be the RSI (see below) turning lower, if accompanied by a strong close below the $4.00 level 

 

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

An early BEARISH divergence signal has continued to confirm. Further confirmation will show as a move below the “70” level.

It should be remembered the RSI can track above the 70 level for many weeks at a time and remains a signal of very strong price momentum.

Black and White Technical Report: The Week Beginning 22/03/2021, FP Markets

Comments from last week:  A further successful retest of the $4.00 support resistance level sets Copper up for further gains in the coming week. This is a very good signal the Buyers are willing to take the price higher.

This chart should be monitored for a closing price below the $4.00 level as an early sign of price weakness.

The Primary Trend remain UP.

 

AUSTRALIAN VOLATILITY INDEX:
Last week saw a dip below the important 13 level, overall the XVI is edging lower a bullish signal for Equities. 

Yield curve volatility will continue to impact the equities market, however forward pricing is falling (losing the volatility premium) traders should be prepared for a move higher in the equities market.

A close below the “13” level would be ideal for the bullish.

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 22/03/2021, FP Markets

Comments from last week: 

Early with the weekly price bar Volatility again spiked higher (bond yield news) 

IT remains of concern the XVI continued to close above the “13” level a signal of elevated volatility. 

Closer inspection of the price bars shows last weeks close is a 5 week low and may lead to further declines and will remain Bullish for equities.

USD DOLLAR INDEX
Price structure:
The $USD index continues to display very bullish behaviour with a closing price over the 91.66 level.

This will be the benchmark level to hold in the coming week/weeks.
The underlying Primary trend for the DXY has changed from down to UP and may force a continuing short cover trade adding to the bullish upside for price.

Indicator:  Relative Strength
While the RSI has made a sharp recovery above the 50 level. Traders will look for an RSI to remain above the 50 level to confirm a more significant momentum move higher is underway, this remains highly probable. 

Black and White Technical Report: The Week Beginning 22/03/2021, FP Markets

Comments from last week:  This remains the most important chart for traders.

The breakout above the 91.66 level is significant as is the current orderly decline in the form of a Bullish Flag.

Last week’s breakout put the DXY into a Primary UP trend.

WTI CRUDE OIL
Price structure:  This commodity is news driven by supply -demand.
Clear rejection of the $66.00 level has resulted in an important close below the $61.80 level.

However the weekly Candle shows a close well off the $58.20 low price, indicating buyers at a low price scenario.

WTI remains within a Primary UP trend with $75.20 as the next upside target price.

 

Indicator: Relative Strength
RSI turning higher over the 50 level and has now moved below the 70 level, momentum remains positive until a move below the key 50 level. 

The indicator is “rolling” lower in line with current price consolidation.

As the indicator moved over 70 and has now dipped below 70, this should also be monitored for a potential divergence signal.

Black and White Technical Report: The Week Beginning 22/03/2021, FP Markets

Comments from last week Price consolidation along this $66.00 level is an important development with the $75.20 resistance level in sight.

The current trendline should be monitored as the dynamic support for next weeks price moves. 

With US driving season approaching WTI should be well supported.

  • Black and White Technical Report: The Week Beginning 22/03/2021, FP Markets
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