Black and White Technical Report: The Week Beginning 31/05/2021

Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets

The West Texas Oil contract closes at a two year high.

US and Australian indices remain within a consolidation phase but trading at major resistance levels. With strong earnings numbers and continued Central Bank liquidity markets may continue higher on a breakout in the short term.

The term “transitory” has been used to describe recent inflation, with observers divided on the outcome, some commentators suggesting an “inflation spike” others inferring some more long-term cyclical inflation. Over the long term the outcome on equities will be mixed and traders should always follow the chart.

Gold and Silver and Copper remain very bullish, as support levels move higher on the potential of underlying real rate rises coming from the spike in inflation. Of note is the Australian dollar Gold price remaining over the $2400.0 level last week underpinning support of local miner’s equity price. Gold (US1902.0)  in every major currency denomination continues to display a breakout from the recent down trend.

 

XJO WEEKLY
Price structure:
The XJO has finished the week at the high and at a significant resistance level, this being the 2nd attempt to move past 7200 points. The strong finish and record closing price last week following 6 weeks of consolidation is a bullish signal for further gains in the coming weeks. Key support remains at the 6900 level with the current underlying Primary trend remaining UP.


Indicator: Relative Strength
The RSI indicator has remained over the key 50 level, last week turned higher, this is a signal of improving price momentum, the reading remains above the 50 level indicating price momentum remains positive. A further reading over 70 would put traders on alert for some form of slowing divergence signal.

The RSI should be monitored for a potential move below the key level of 50 to show a shift to bearish momentum.

Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets

Comments from last week: The developing consolidation between resistance of 7130 and 6900 support shows as “midpoint” support from the strong range impulsive bar of early April.

This remains a positive pattern for further gains. With support and resistance in place a breakout of the high 7130 may see a retest of the all-time high.

As the Index calculation is “weighted by market cap” the Index value is stating equities in the top 20 remain well supported.

With a breakdown below key support of 6900, the earlier support level of 6737 awaits.

XJO DAILY
Price structure:
A very bullish picture from the mid-week flag pattern with a strong finish on Friday. The heavy weights of the Index are doing the lifting. Individual observation of the Bank and leading Commodity stocks price action looks very bullish for further continuation.
Friday’s large range bar can be a strong signal for further immediate gains.
Daily support remains at 7090.8.

 

Indicator:  Relative Strength
The reading shows a strong advance in the Relative strength reading, the reading can remain over the 70 level for some weeks. A reading over 70 is not a bearish signal, but rather a signal of strong momentum.

 

Indicator:  VOLUME
Overall volume has switched profile with higher volume day on Friday. Strong volume would be expected on further breakout signals to confirm Buyer participation. 

Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets

Comments from last week:  The daily chart may have completed the a, b, c pattern reversal. The last 3 bars now showing as the “3-bar reversal” pattern. This chart is really highlighting the overall confusion in the market direction, with a long consolidation periods in 2020, and now again in the first months of 2021. The chart also displays the 5-period simple moving average, with price moving higher over the average, and the average itself turning sideways as price completes the small reversal pattern.

The 7090 is the first resistance for higher prices, a retest of the “pipe reversal” high is not out of the question in the coming days.

S&P 500 WEEKLY
Price structure:
Overall short-range weeks and small price ranges between the open and close continues to show the S&P500 in consolidation. (Secondary phase). This is not a reversal pattern.

The closing price for each of the past 4 weeks has been in the high part of the range, buyers have remained in positions over the weekends and this past week again the close is towards the high of the week with a 3 day weekend in the US.

Key support remains at 4114.0

 

Indicator:  Relative Strength Indicator
The RSI observation remains the key signal and is currently reflecting weaker price momentum as the indicator moves below the 70 level. With the reading moving sideways, this is not a level of over brought, and still only indicates very strong momentum, and can last for many weeks.  (This type of momentum can be a precursor to profit taking.)

Should the RSI show a movement below the 50 level, this would be a strong bearish signal.

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 31/05/2021, FP Markets

Comments from last week: The #3 marked bar may have played out with last week’s lows reversing from 4046 intimate support with a second Weekly “hammer bar” displayed. The sellers have now had an opportunity to move the markets lower but failed. The SPX may consolidate further along these levels, prior to a breakout higher.

The last 2 weeks of trading the bars have displayed long lower shadows a signal of buyer support at lower prices.

While the short term trendline has been broken important support levels of 3980 and 3725 remain in place.

 

S&P 500 DAILY
Price structure:
The close over 4182 was the key last week in the Daily patterns. 4230 is the major resistance level to pass in the coming week. Trader would monitor this level for a price rally to close over 4230.0. During the coming week a close over this level followed by a close below this level could be an early fake out high and a bearish signal.

 

Indicator: Relative Strength
Relative Strength short term has turned higher above the 50 level. It is a good indication to see the higher low made, momentum is again shifting to an upward bias. The indicator should be monitored for continued readings above the “50” level. 

Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets

Comments from last week:  The a, b, c pattern has not quite played out, although price “GAP” has been resolved, leaving the lower GAP at 4035 in play from Fridays Fake out (FO). The Weekly chart suggest further consolidation, this Daily chart displays that consolidation between support of 4035 and 4238 resistance.

USD Spot GOLD – DAILY
Price structure:
USD Gold has closed over the key resistance level of 1863.66 and above the important $1900 level.

The recent days price structure is a Bullish Flag pattern, Friday’s OPu with eh high close in the range may signal further gains in the coming days.

The overall chart structure remains very Bullish with the next target of $1966.80 in sight as the underlying Primary UP trend remains in place.

Key support is now set at the old resistance level $1863.66, a close below this level would be a very bearish signal.

 

Indicator:  Relative Strength
Relative Strength turns sharply higher and moved above the key “70” level in line with the current breakout of the trading range. As the indicator has made a new high in line with the price action, the underlying structure could now continue to be monitored for a “divergence” signal where the RSI moves lower but price moves higher.

Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets
Comments from Last week:
The daily chart of Gold shows a major breakthrough of the historical support resistance level of $1863.66. The OPu on Wednesday may have marked the high for the short term and will be the high ($1889.75) level to resolve in the coming days.

$1966.80 beckons within this Primary UP trend.

SILVER DAILY
Price structure:
The daily chart for Silver shows continued consolidation below $28.40 and above $27.70.

This type of consolidation can be observed at the support resistance level of $26.00 during April 2021.

The daily chart is absent of any strong down days and remains within the confines of a Primary UP trend.

Key support is the $27.70 level, should price close below this level a fast retest of the $26.0 level may be underway.

A close over $28.40 would be a very bullish signal for a further retest of the January $30.0 spike high.

 

Indicator:  Relative Strength
A poor indication of price strength is showing in the Relative strength Indicator (14) as the reading has moved over the 50 level and again moved over the 70 level for 2nd time, but rolled lower, an RSI Bearish divergence signal is in place . This type of movement could be expected in this type of price consolidation.

A bearish signal will be displayed with RSI moving below the 50 level.

Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets

Comments from last week: Last Tuesday’s Fake out high (FO) has set a small reversal to test the short term trendline. Silver price movements lack any real impulse movement higher. A potential retest lower, back to $26.00 is probable as momentum is lacking with an RSI divergence “sell” signal in place.

AUD GOLD DAILY
Price structure:
A significant result for the AUDUSD price to close over $2400 for the past week. The continued advance in the underlying US Gold price is now critical as the other important factor of this trade is the $AUD trading around the .7780 level.

This remains the driving factor for the Australian based Gold producers continuing to trade higher. NCM, NST, SLR and GOR 

The key psychological level of $2400.0 will be the key level to hold in any type of price retracement.

The smaller Australian speculative explorer stocks will remain news dependant.

Indicator:  Relative Strength
This momentum indicator has continued a wider swing higher over the key 50 and 70 level in line with price gains to reconfirm a valid RSI buy signal. BUT the RSI is rolling sideways as price puts in a new high, momentum may be about to slow. 

Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets

Comments from last week: This type of trendline breakout pattern has occurred with Gold in every major currency. EUR-XAU, Yuan-XAU, JPY-XAU.

The price level of $2541.0 remains the target, but after several weeks of gains a retracement would be probable as the RSI rolls lower.

The outcome would show as consolidation in price of Australian producers. NCM, NST and SLR..

COPPER DAILY
Price structure:  Inventories remain historically low.
The expectation of a “gap fill” has not taken place with an immediate reversal to close back over the $4.61 level. 

A very bullish signal for further gains as the large price range week closes on the high.

The all time high level of $4.61 will be the important support level to hold in the coming weeks.

This chart remains in a very strong Primary UP trend with the spike high point of $4.89 from 3 weeks ago the first level to monitor. A close over this level would send a very strong signal to the market traders of an exponential price move underway.

Indicator: Relative Strength
Relative Strength has moved above the 70 level again this reading, constitutes a failure in the potential Bearish divergence signal so-far. 

Confirmation of a loss of momentum will be shown when the RSI moves below the “70” level and below the internal low set during February. The highlighted level in red.

It should be remembered the RSI can track above the 50 -70 level for many weeks at a time and currently remains a signal of very strong price momentum.

Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets

Comments from last week:   The most important observation in the Daily Copper chart is the closing price below the $4.61 level constituting a short term sell signal.

With the close on Friday setting a reversal pivot point the lower Gap at $4.36 remains the price target in this well-defined UP trend. 

Copper remains a Bullish fundamental play based around lack of new production and low inventories.


AUSTRALIAN VOLATILITY INDEX:
The forward price of risk has again remained in the benign area between 11 and 13, a mildly bullish signal for further equity gains.
Any close over the 13 level would be cause for concern and will reflect in the equities market as an early BEAR signal.

Overall, in the chart looking back to MAY 2020 the volatility levels have steadily declined, a good outcome for a forward steady and higher equities market.

The XVI is the difference of 1-3 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 31/05/2021, FP Markets

Comments from last week: Forward risk has reduced with the XVI reading falling back into the bullish zone. Going forward the outlook is for equity gains as primary trends resume.

USD DOLLAR INDEX
Price structure:
The Friday closing bar (shooting star) is showing clear rejection of higher levels and now falls back within the confines of a developing Bearish flag pattern in line with the already established Primary down trend.

89.64 remains the first short term support level, a further close below this level may see the nest support of 89.19 tested.

This week a close over the high of Fridays bar would negate the bear signal, in this scenario,

the DXY would now enter a potential trading range with 90.85 as resistance and 89.64 as support.

 

Indicator:  Relative Strength
While the RSI has continued to track sideways, while below the 50 level, this will be monitored for a cross of the “30” level as confirmation of downward price momentum increasing. 

Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets

Comments from last week:  Last week’s lows at 89.64 now a key support level for the coming week, a price break below this level would reconfirm the Primary Down trend of the DXY.

The current price channel developing the lower support of 89.19 is the short-term target.

Further pricing pressure on Commodities may be the outcome.

 

WTI CRUDE OIL
Price structure:  This commodity is news driven by supply -demand.
The 2 year high close of the WTI contract is a very bullish signal for a further breakout over the $66.00 level. Last week’s strong range with a high close, sets up further gains in the coming weeks.

WTI remains with a Primary UP trend as the current consolidation develops. The trendline remains “tentative”.

A breakout further would target $75.20 July 2018 resistance.

 

Indicator: Relative Strength
RSI turning higher while above the 50 indicates increasing positive price momentum in the current price consolidation phase. 

Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets

Comments from last weekAnother Outside period (OP) within the range of $61.80 and resistance of 66.00. The trading range resistance level has been in play for many years. Currently there are no chart signals to say this may trade higher in the short term.

The OP is a marker for a market high and will need to be resolved with a price breakout either way from this consolidation area.

  • Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets
    • Articles
    • Views
    AUTHOR

    FP Markets

    FP Markets is an Australian regulated broker established in 2005 offering access to Derivatives across Forex, Indices, Commodities, Stocks & Cryptocurrencies on consistently tighter spreads in unparalleled trading conditions. FP Markets combines state-of-the-art technology with a huge selection of financial instruments to create a genuine broker destination for all types of traders.

    PROFILE
Start Trading with a Global Broker

Archives

Archives

Categories


Start
Trading
in Minutes

Open an account now


Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets Access +10,000 financial instruments
Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets Auto open & close positions
Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets News & economic calendar
Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets Technical indicator & charts
Black and White Technical Report: The Week Beginning 31/05/2021, FP Markets Many more tools included

By supplying your email you agree to FP Markets privacy policy and receive future marketing materials from FP Markets. You can unsubscribe at any time.