Black and White Technical Report: The Week Beginning 23/11/2020

Black and White Technical Report: The Week Beginning 23/11/2020, FP Markets

The Australian XJO continues with a strong breakout higher above a key 23 week resistance. During the past week trading Volumes have declined and warrant a cautious outlook for the week, the best outcome is for consolidation at these current levels.


This coming week as technical breakouts are often followed by a “retest” of the breakout level reversal patterns will be monitored.


Both Gold and Silver are trading along significant multi week support levels, the current risk is long holders may be forced to accept Stop losses if these levels are broken.


Both markets provide very good trading opportunities as consolidation often leads to a volatile directional price movement.

WTI West Texas Intermediate has moved above the very important $42.0 resistance level and continues to look bullish.

 

XJO WEEKLY
Price structure:
The Index (on the strength of the Banks) has moved past two very important resistance levels without looking back. While the Index has only a few heavily weighted stocks to drive it higher, the underlying market sentiment often drive all stocks.

The Weekly price range is shorter than last week, which was shorter than the week before, this shows buyers are weakening.
While the RSI looks at relative gains against losses, the shorter trading range is a signal momentum may be about to change. A retest of the breakout may be near.

Indicator: Relative Strength
The RSI indicator has turned sharply higher remaining over the key 50 level. A very good signal of Weekly improving price momentum.

Indicator: MACD
MACD remains a swing “Sell” signal again this week and has continued in developing a sideways movement, only reflecting the slowing momentum. The completed full cross over becomes the Sell signal. 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 23/11/2020, FP Markets

Comments from last week: Last week the index posted a strong range bar as a follow on from the impulsive reversal two weeks ago. Historical resistance levels seem to be having a strong influence with the close last week at the 6430 support/resistance level. Last week’s move is a break away Primary movement from the 23 week consolidation area. From early June to this week the XJO did not enter into a primary down trend, and this current higher low and new high may be looked back on as the first signal of the continuing uptrend.

 

XJO DAILY
Price structure
The Daily chart shows the breakout from the Bullish flag discussed last week. The Daily ranges are considerably shorter than 2 weeks ago, and signalling a loss of buying momentum. The current move from the Pivot reversal of 3 weeks ago could be considered “extended” with a risk of profit taking setting in. In a retracement the breakout of the bullish flag (6400 points) would be the first downside target, followed by a retest of the initial breakout at 6200.
 

Indicator:  Relative Strength
Relative Strength has moved over the “70” level, this is not an over brought signal. The current level is a reflection of a strong momentum move underway. Late last week the indictor “rolled” lower again and will be monitored for a divergence signal. This would require the market to make a new high while the RSI line makes a lower high.  

 

Indicator:  VOLUME
Volumes have been robust during the past week however the declining volume pattern over the 5 days again indicates a lack of commitment by the buyers, look for further rising volume days on a continuation of the current move higher.

Black and White Technical Report: The Week Beginning 23/11/2020, FP Markets

Comments from last week:  Commentary around the potential distribution top can now be dis-guarded as the current breakout is a decisive move by the Bulls. Last Thursday and Friday have resolved into a developing Bullish flag, further weakness has the potential to “retest” the 6200 breakout. The short term trend support line is now in place, future price action may test support along this line.

 

S&P 500 WEEKLY
Price structure:
The indecision of two weeks ago has been confirmed again this week with an inside range bar. This may be the turning point for the midpoint retest of the 3400 level. The structure of the Weekly chart does not look bullish and will require a momentum ( large range) breakout above last weeks high. This coming week the move is favoured to the down side as a retest of the breakout.  

 

Indicator:  Relative Strength Indicator
Relative Strength rolling lower but above the key 50 level is a good signal of changing price momentum, a move below 50 would have signalled very week momentum. The upturn 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 5 months.

Black and White Technical Report: The Week Beginning 23/11/2020, FP Markets

Comments from last week: The S&P 500 has posted a spinning top bar a signal of indecision. Current market breadth, a measure of advancing equities again declining indices remains a bearish at 30% ish for the recent period along with only 60% of listing making YoY highs. This indecision may see some selling enter the market as a form of retest of the breakout, consolidation above 3400 would be a good sign the Bull market signal remains in place.

 

S&P 500 DAILY
Price structure
More intimate support can be seen in the Daily chart at the 3520 level, with the Bullish flag developing this 3520 level would be monitored for support. Several Gaps remain open at lower levels, should 3520 fail, these would be the target in the coming weeks.

 

Indicator: Relative Strength
Relative Strength has turned lower, The turn down from Friday’s close three weeks ago now sets up the potential for some further consolidation of price at this level. This should be monitored for a movement below the key 50 level as a loss of upward momentum may be underway.

Black and White Technical Report: The Week Beginning 23/11/2020, FP Markets

Comments from last week:  The daily chart is one of developing consolidation, several “gaps” remain below  the WEEKLY support level of 3400, this can be problematic should selling enter the market a potential move into 3100 would be needed to close the gaps. With Friday’s high close a retest of Monday’s high is the preferred outcome. Price movement around the 3580 level will be the critical level to watch in the short term.

 

USD Spot GOLD – WEEKLY
Price structure:
US 10 year yields have risen, placing pressure on the Gold price. Gold sits at a very strong support level of $1855.00. A close below this level would place a significant number of “buy the dip” traders in a losing position, and may lead to further selling. The potential for an a, b, c movement remains with a longer target of $1764.0 and ultimately a test of the trend line.

 

Indicator:  Relative Strength
Relative Strength turns lower and importantly remains above the “50” level. While below 70 and above 50 there is not much to read into the indicator until a move over 70 occurs. The overall declining of the RSI over the past 9 weeks is a bearish signal.

Black and White Technical Report: The Week Beginning 23/11/2020, FP Markets

Comments from last week: Last week Gold failed to close over the $1970 level negating any further bullish signal. I have marked the potential a, b, c movement developing. Last weeks outside (OPd) range is a bearish signal and will be difficult to over come in the short term. Gold remains inside this consolidation, a break of $1855 support would send a sell signal with the further potential to retest the longer term trendline. The primary trend remains UP, with a close below $1855.00 this would put Gold into a Primary down trend.

 

AUD GOLD DAILY
Price structure:
Currently a series of indecision bars are setting up a potential turning point in the form of a 3 bar reversal. This support level from June 2020 is undergoing a second retest. Should USD gold move lower this chart will show a breakdown of support. Both the USD Gold price and the AUD Gold price have undermined the Australian Gold miners NCM NST and EVN.

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

 

Indicator:  Relative Strength
With the RSI turning sideways below the key 50 level. This indicator has swung around the 50 level since August and Traders should monitor this indicator for a continued swing higher in line with any price gains to confirm a valid buy signal.

Black and White Technical Report: The Week Beginning 23/11/2020, FP Markets

Comments from last week: The significant move lower in AUD Gold has broken a key support level at $2610 with the following trading days only moving higher to retest the breakdown level. 

This level will be difficult to overcome as the move lower has been quite decisive. Last Friday’s indecisive bar has the potential to mark a short term turning point.

 

SILVER DAILY
Price structure:
Last Thursday’s low in Silver has retested the longer term trend-line confirming the line as valid ( 3 touches). Silver remains at an inflection point again as the metal price trades sideways within a 2 month consolidation. Statistics show the PM sector can take many months or years to move past the penultimate volatility  highs.  

 

Indicator: Relative Strength
With RSI now moving along the 50 level as this consolidation develops.

 

Indicator: MACD
The MACD has provided a swing Sell signal and should be monitored as a sell signal. With the MACD now moving sideways this should be monitored for a confirmation buy signal.

Black and White Technical Report: The Week Beginning 23/11/2020, FP Markets

Comments from last week:  The Daily chart of Silver is developing a bearish flag pattern (4 days) following the sharp decline last Monday. 

Silver continues with a large Secondary market movement. A further retest of the tentative trend line may confirm support along this line, a breakdown lower would be a bearish signal for further declines.

Silver is approaching the decision point within a very large “pennant”, these area’s of low volatility can lead to highly volatile breakouts.

COPPER DAILY
Price structure:  Inventories under pressure.
The Weekly price bar has closed on the high following an early week sell back to close the price Gap left open from Monday’s  GAP open.

This is current high close is a very Bullish scenario for a continued momentum move higher in the coming weeks.  

The Primary UP trend remains in place.


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 will be shown if price moves below last week’s low around $3.20. and the RSI moves lower inline.

Black and White Technical Report: The Week Beginning 23/11/2020, FP Markets

Comments from last week:  Last week Copper provided a 2nd retest of the $3.20 level, the high close in the range of the weekly bar, suggests a breakout to higher prices and a retest of $3.30. The developing rising wedge pattern can breakout lower on rejection of higher prices. See RSI note.

AUSTRALIAN VOLATILITY INDEX:
The ASX closed on Monday due to a technical error it seems the resulting outcome from the ASX mispricing some ETO combination orders has affected the XVI value with a significant spike lower.

However what is important is the closing value now below 20 and approaching level where Equities get very bullish as Risk protection is reduced.

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 23/11/2020, FP Markets

Comments from last week:   The GAP open lower and the midweek spike low below 15 has been a Bullish signal for equities. However the XVI value still remains elevated at 19.89, only indicating forward pricing of Equity Options as protection remains high.

USD DOLLAR INDEX
Price structure:
92.1 and 93.0 are the two critical levels to monitor in the coming week. The overall declining highs are indicating a break lower.
These long consolidation periods often lead to volatile breakouts as the Primary trend is Down, a downside breakout is expected. 


Indicator:  Relative Strength
A complete breakdown of the Relative strength to move below the “50” level, the current swing lower is a significant implication for price. What was a bearish outside period (OPu) followed by the impulsive signal , the RSI continues confirmation of further price weakness as the indicator turn sideways. 

Black and White Technical Report: The Week Beginning 23/11/2020, FP Markets

Comments from last week:  With the lower low now set, the underlying Down trend remains in place with current daily resistance shown at 93.00. Although the USD remains within a trading range from 92.1 to 94.65 the overwhelming weight of price action remains along the support level.

A break of this level may bring in price volatility as the next lower level of support is found.

WTI CRUDE OIL
Price structure: This commodity is news driven by supply – demand.
Two weeks ago WTI price probed higher looking for Buyers, my comments suggested none were found. The price picture for WTI has decidedly changed for a potential Bullish breakout to take place following last weeks inside range with a high close. The $42.0 support / resistance is the level to monitor in the coming week for closing price support.

 

Indicator: Relative Strength
RSI turning higher over the 50 level is a very good for further momentum price gains. 

Black and White Technical Report: The Week Beginning 23/11/2020, FP Markets

Comments from last week: Resistance at $42.00 with support at $35.81 again tested. WTI can only be described as being trapped within a narrow price range.  (23 weeks!)

Last week’s bar with a shadow at the lows and highs indicates neither the Buyers or sellers have control of the price. Further consolidation is expected.

  • Black and White Technical Report: The Week Beginning 23/11/2020, FP Markets
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