Black and White Technical Report: The Week Beginning 30/11/2020

Black and White Technical Report: The Week Beginning 30/11/2020, FP Markets

US and Australian markets remain buoyant as the news of a vaccine removes any immediate downside risk, with markets continuing to price in an improving economy fuelled by central bank liquidity.

 

Volatility indexes have moved lower to a bullish outlook for equities. There is little risk being perceived by market traders as Index’s continue higher.

The talk of the energy sector being the trade for 2021 is being confirmed as west Texas Intermediate moves above a very long term and significant resistance level.


Oil has entered a Primary UP trend and appears to be in the early stages of a Bull market. 

 

XJO WEEKLY
Price structure:
The Breakout above 6430 two weeks ago is losing momentum as the closing price last week settled in the lower part of the range and well short of the higher resistance level of 6740. The Index remains in a Primary UP trend.

 

Indicator: Relative Strength
The RSI indicator has remained over the key 50 level, however now showing a slowing advance as the indicator rolls sideways. But remains 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 30/11/2020, FP Markets
Comments from last week: 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.

XJO DAILY
Price structure:
From the 5900 point lows made in early November the Index has made a significant advance with only a short two day consolidation mid-month. Last week the Thursday / Friday rejection of higher prices as resolved into a reversal pivot point.
While price momentum remains to the up side any retracement is likely to be shallow and would present a buying opportunity.

Indicator:  Relative Strength
Late last week this momentum 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
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 reversed with an increase of volumes on UP days and lower volumes on down days, this observation suggests accumulation on a fear of missing out (FOMO). This type of pattern is very supportive of further gains ahead.

Black and White Technical Report: The Week Beginning 30/11/2020, FP Markets

Comments from last week:  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.

 

S&P 500 WEEKLY
Price structure:
The inside range of 2 weeks ago has resolved into a new push higher to see the index close at a record high of 3638 points. Last week showed a good open to close range compared to the previous 2 weeks, with the close towards the high. As the Primary UP trend remains in place, further gains would be expected in the coming week. The Mid point support of 3400 remains in place as the potential retest level should the market find sellers in the coming weeks.

 

Indicator:  Relative Strength Indicator
Relative Strength remains above the key 50 level is a good signal of continuing 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 30/11/2020, FP Markets

Comments from last week: 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.  

 

S&P 500 DAILY
Price structure:
The shortened trading week on lighter volumes has shown the market is willing to hold these record high levels. The current Daily Bull flag breakout and consolidation above 3850 remains a signal of buyer control.

 

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 30/11/2020, FP Markets

Comments from last week: 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.

 

USD Spot GOLD – WEEKLY
Price structure:
Gold has entered a Primary Down trend with the price move below (a), the overall decline is currently 13%. Although a confirmed a.b.c correction is now underway as part of the larger Primary UP trend, it cannot be discounted that a top for Gold is now in.
The large range bar last week suggests further weakness in the coming week, with a breakdown below $1764 possible. Further price weakness may see the trend-line tested at around $1700.0

 

Indicator:  Relative Strength
Relative Strength turns lower and has now crossed below the “50” level. The overall declining of the RSI over the past 9 weeks continues as a bearish signal.

Black and White Technical Report: The Week Beginning 30/11/2020, FP Markets

Comments from last week: 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.

AUD GOLD DAILY
Price structure:
The price breakdown from $2537.0 has lead to an extensive decline in price to test the $2400 level within this current price down trend. Although the final close remains off the low, the range of Fridays bar is extended and may see further selling on continued weakness in the USD Gold price. Both the USD Gold price and the AUD Gold price have undermined the Australian Gold producers NCM, NST and EVN. Smaller Gold plays remain dependant on news flow and drilling results.

 

Indicator:  Relative Strength
With the RSI turning lower below the key 50 level showing a complete loss of upside momentum. With the current reading below the 30 level, traders would monitor this indicator for a Bullish divergence signal in the coming days. This indicator has swung around the 50 level since August. This momentum indicator needs a  continued swing higher in line with any price gains to confirm a valid buy signal.

Black and White Technical Report: The Week Beginning 30/11/2020, FP Markets

Comments from last week: 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.

 

SILVER DAILY
Price structure:
Another Trend line broken during the past week and a new lower low (LL). As with the Gold chart support levels, the breakdown level of silver shown at $19.74 would be the further downside target on continued price weakness. Without a price reversal signal the Daily down trend in Silver can be seen with the accelerating down trend lines.

Indicator: Relative Strength
With RSI now moving below the 50 level as last week’s consolidation breakdown develops into a Primary down trend, a further loss of momentum should be expected.

 

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 with any confirmed upswing in price.

Black and White Technical Report: The Week Beginning 30/11/2020, FP Markets

Comments from last week:  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.  

 

COPPER DAILY
Price structure:  Inventories under pressure
The Weekly price of Copper has seen a good follow through from the test of resistance at $3.30. Last week’s large range price bar is a good signal for further gains in the short term. The next key resistance level is now $3.47 as this significant corrective up swing takes 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 $3.28. and the RSI moves lower inline.

Black and White Technical Report: The Week Beginning 30/11/2020, FP Markets

Comments from Last week:  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.

AUSTRALIAN VOLATILITY INDEX
Volatility levels are returning to 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.

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 30/11/2020, FP Markets

Comments from last week: 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.

USD DOLLAR INDEX
Price structure:
The USD Index is testing lows from early September and the support level from 2nd Quarter 2018 following the break of 92.10 identified last week as the level to hold. The USD price is influenced by many factors including perception of rising yields and the underlying strength in other currencies in particular the Euro dollar. 


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 further price weakness. What was a bearish outside period (OPu) followed by the impulsive signal , the RSI continues confirmation of further price weakness as the indicator turn lower. 

Black and White Technical Report: The Week Beginning 30/11/2020, FP Markets

Comments from last week:  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.

 

WTI CRUDE OIL
Price structure: This commodity is news driven by supply -demand.
This is significant! A solid closing price above the $42.0 resistance level that has been in place for over 2 years. With last weeks close over the July highs, West Texas Intermediate has entered into a Primary UP trend. This may bring in further buying as short positions are closed and speculative buying takes place. Next key resistance level is $50.60, WTI remains on track to test this level.

 

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

Black and White Technical Report: The Week Beginning 30/11/2020, FP Markets

Comments from last week : 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.

  • Black and White Technical Report: The Week Beginning 30/11/2020, FP Markets
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