Black and White Technical Report: The Week Beginning 29/03/2021

Black and White Technical Report: The Week Beginning 29/03/2021, FP Markets

US equities have begun a new leg higher with the S&P closing at an all-time weekly high, with the Nasdaq also setting a swing low as the Index turns higher to consolidate below 13,000 points. Traders will monitor the RUT2000 also attempting to take out the early March highs of 2360. The basis of DOW Theory is the Indexes must confirm to sustain a Bull market view. Following recent weakness this is an important metric to hold in the coming weeks, as the approaching month of April is seasonally the best month of the year for returns.

The most important chart in the world (along with the US10 year) is the US dollar Index (DXY) now setting a new 5 month high, as the price enters a Primary UP trend.

The results are Commodity prices beginning to consolidate as the USD rises with surrounding FX pairs declining. 

Copper, Gold and Silver continue to consolidate at very important levels as Bond Yields also consolidate following recent sharp advances.

 

XJO WEEKLY
Price structure:
Last week saw a solid price move towards the recent highs and an important close above the 6737 level. This will be the level to hold in the coming shortened week. With a strong close, but a relatively short range for the week, further consolidation would be ideal with the 7130-target resistance level in sight. The underlying primary trend remains UP.


Indicator:
Relative Strength
The RSI indicator has remained over the key 50 level, last week turned higher again, this is a good signal of improving price momentum.

The RSI should be monitored for a potential move below the key level of 50 to show a 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 has moved to a swing sell signal.

Black and White Technical Report: The Week Beginning 29/03/2021, FP Markets

Comments from last week: 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.

 

XJO DAILY
Price structure:
Five trading days higher to test Daily resistance at 6837, the first close this week (Monday) will possibly signal the real strength or not in the market.
With a shortened week (4 days) expect some risk off into the close of the week (Thursday). The key psychological closing price level to hold on any price weakness is 6800 points.

Key stocks again this week will be the 4 banks along with the large materials BHP, RIO, FMG.

Selling in this area can bring the index back to daily support of 6655 points.

Indicator: Relative Strength
With RSI making a new move above the key 50 level bodes well for further gains with a move above the 70 a signal of strong price momentum.


Indicator: VOLUME
Overall volume has been increasing as price rallies, Friday high but not outstanding volume is a good signal of new accumulation taking place.

Black and White Technical Report: The Week Beginning 29/03/2021, FP Markets
Comments from last week:  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 Friday’s 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.

 

S&P 500 WEEKLY
Price structure:
The pivot point set 3 weeks ago has now played out into a new move higher.

Along with the retest of 3725 now complete, the all time closing high now remains a good signal for further gains in the coming weeks.

4000 points will be the big target for the index.

Traders should be aware the first signal of overall price failure will be a WEEKLY close below the 3725 level. This event would be significant leaving many buyers trapped above this level.

 

Indicator: Relative Strength Indicator
Relative Strength remains above the key 50 level and has set a Bearish divergence from price. This divergence has now failed as the RSI turns higher as price set a new closing high.

Overall, the 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 29/03/2021, FP Markets

Comments from last week: 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.

S&P 500 DAILY
Price structure:
The Daily chart has set a new Bullish Pivot point reversal following the Bullish flag completion and  retest of 3872.

Friday’s range the largest for the past 3 weeks and sets the tone for further gains. The Daily support level to hold is 3940, a close below this level would alert traders to the potential for further price weakness.

Indicator: Relative Strength
Relative Strength short term has turned sharply higher above the 50 level. The RSI should be monitored for a movement and continuing close above this 50 level and further move higher as upward momentum may gather pace with the current breakout from the bullish flag pattern.

Black and White Technical Report: The Week Beginning 29/03/2021, FP Markets

Comments from last week:  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. Friday’s 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.

 

USD Spot GOLD – DAILY
Price structure:
The daily Gold price remains in consolidation along the down trend line, the current Bullish Flag is set to test the $1764.30 level on a potential breakout.

The ascending long term valid trend line remains in play as the first key support point ($1710) should price work itself lower.
Gold sits at the decision level for a breakout higher. Failure (break of the trendline) at this current level may see a fast retest of $1660.00.


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 29/03/2021, FP Markets
Comments from last week: 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.

AUD GOLD DAILY
Price structure:
As the $USD gains strength the $AUD remains under pressure, for Australian Gold producers this remains a positive as the AUD related Gold price moves higher increasing producers’ production and refining margins.

Overall, the Trend remains DOWN, it is important to acknowledge the short down trend lines are being challenged, giving the first signal of increasing upward momentum.

 

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

This momentum indicator continued swing higher over the key 50 level in line with price gains to confirm a valid RSI buy signal. The Thursday / Friday consolidation see’s the RSI turn lower, this will be monitored to remain above the 50 level.

Black and White Technical Report: The Week Beginning 29/03/2021, FP Markets
Comments from last week: 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.

SILVER DAILY
Price structure:
Last Thursday the $24.30 was again retested with Friday a short-range day also setting a 2nd 3 Bar bullish reversal pattern. The $26.00 resistance level remains in play as the potential retest level on any upward momentum.

Two important levels are developing $24.30 support and $26.00 resistance, a close below or above these levels will be an important outcome for momentum traders in the coming weeks. 


Indicator: Relative Strength
Relative Strength has turned lower below the 50 level, operating in line with the underlying declining price movement. A good signal for further improvement in price momentum would be a move above the 50 level. Friday’s turn higher is a good start.

Black and White Technical Report: The Week Beginning 29/03/2021, FP Markets

Comments from last week: 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.

 

COPPER DAILY
Price structure: Inventories under pressure.
This is a good outcome for the Week, further consolidation above the $4.00 level following the intra week retest falling below this level and moving higher showing buyer support on short term weakness. The current “pennant” formation is a continuation pattern with a breakout higher expected. However consolidation has not time limit, a breakdown below the $4.00 level may see $3.80 tested.

Indicator: Relative Strength
Relative Strength has remained 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 29/03/2021, FP Markets

Comments from last week: 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.

 

AUSTRALIAN VOLATILITY INDEX
A good move for local equities as the XVI moves and closes below the 13 level, indicates the falling requirement for forward “insurance” via PUT options.

This current level will remain supportive for further gains in the XJO and XAO.

A continuing close below the “13” level would be ideal for the bullish view to remain in place.

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 29/03/2021, FP Markets

Comments from last Week: 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.

USD DOLLAR INDEX
Price structure:
A strong early breakout last week has ended in a short-range last Friday. What cannot be denied is the overall Bullish breakout above the long term down trend line and price remaining above the key 91.66 level. This may have longer term pricing pressure in the commodities space, BUT this is yet to play out.

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 29/03/2021, FP Markets
Comments from last week:
 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.

WTI CRUDE OIL
Price structure:  This commodity is news driven by supply -demand.
WTI is developing a Bullish flag pattern, the current close below the key level of $61.80 should be monitored as resistance in the coming days. A close over this level would be a strong signal for the Bullish view to remain place. 

The trendline has been redrawn following the recent break and again remain a tentative line to hold in the coming weeks.

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 29/03/2021, FP Markets
Comments from last week 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.

  • Black and White Technical Report: The Week Beginning 29/03/2021, FP Markets
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