Black and White Technical Report: The Week Beginning 4/01/2021

Black and White Technical Report: The Week Beginning 4/01/2021, FP Markets

Expectations are high for a positive start to the New Year 2021 following a strong close into the Christmas period 2020. Markets continue to disregard the Corona virus fallout on the economy, with retail trade remaining strong along with Governments and Central banks ensuring the underlying credit markets remain fluid.

Gold and Silver enter a positive seasonal period which may support the equity price of some of the producers.

 

On the back of a potential spike in value of the underlying $USD, Australian Gold and Silver producers may find some pricing support in the early part of 2021.

 

 

 

XJO WEEKLY
Price structure:
The developing reversal signal in the Weekly chart may be the result of light risk off prior to the Christmas period. The close of last week on the low is a very Bullish signal for the coming week and worth monitoring for a long entry. The final down close bar can be used as the reference point for this week’s price action, with close above the 6275 high as the bullish continuation signal.

Primary Trend remains UP.

 

Indicator: Relative Strength
The RSI indicator has remained over the key 50 level, however now showing a slowing advance as the indicator rolls further sideways. Combined with the Fake out signal in the chart, continued consolidation remains the preferred outcome. But the RSI remains a very good signal of price momentum currently slowing.

Indicator: MACD
MACD has moved to a swing buy signal, again this highlights how slow this indicator can be in a fast market. 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 4/01/2021, FP Markets

Comments from last week: With a significant drop in underlying Volatility (see XVI below) the market is poised to move higher on light volumes. Consistent retesting of the 6740 resistance level without any meaningful retracement lower suggests good buyer support. A weekly closing price below the 6585 low of last week would signal a reversal, this is yet to play out.

 

XJO DAILY
Price structure:
A broader consolidation pattern can be seen developing in the XJO Index via the Daily chart. Last Thursday’s large range when compared to the early part of the week indicates selling into the close ( risk off) prior to the holiday period. On market open as risk is re-assumed this 6575 support area may set the base for higher prices.

 

Indicator: Relative Strength
Last week this bearish momentum signal continued developing, and the coming week has confirmed the Relative strength has further developed into a Bearish Divergence signal, the price has set new lower prices in line with the RSI again moving below the 50 level. In the Daily view this can change (turn higher) very quickly with any price recovery.

 

Indicator: VOLUME
Volumes are traditionally light during this holiday period, so not that much can be read into this underlying indicator.

Black and White Technical Report: The Week Beginning 4/01/2021, FP Markets

Comments from last week:  The Daily chart of the XJO continues to develop into a small trading range, last weeks 6585.0 point low is the key daily support level, A daily close below this level would suggest a test of 6510 is underway. Traders should be aware the holiday season to mid January provides only light volumes thru the market, with only light institutional sellers the Index may find support as key weighted stocks ANZ, NAB, CBA and WBC along with WES and CSL and APT continue to hold recent gains.

 

S&P 500 WEEKLY
Price structure:
Last week’s strong Gap open only resolves the market to close the Gap as quickly as possible to remain Bullish. The short range week can be the result of light Christmas volumes, however the chart remains very Bullish for further gains.

Primary Trend remains UP.

 

Indicator:  Relative Strength Indicator
Relative Strength remains above the key 50 level and currently remains a good signal of continuing price momentum. The RSI 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 6 months.

Black and White Technical Report: The Week Beginning 4/01/2021, FP Markets
Comments from last week: Throughout 2020 may key reversal signals have failed to follow thru lower. Last week again the Index posted a #3 type of range with the open close in the high part of the range, this often has a follow thru lower in the following 2 weeks. How-ever with markets fully supported by US Federal reserve liquidity injections this signal has failed over and over. During the short US holiday period and US presidential inauguration, further consolidation would be expected.

(Relative Strength remains supportive of further gains.)

 

S&P 500 DAILY
Price structure:
The shorter term daily chart shows an Outside period from last Thursday closing towards the high. Often the OPu will mark an interim high point in pricing, this provides the opportunity for the market to close the immediate Gap below. Early price consolidation would be a Bullish signal for further price gains in the coming weeks.

 

Indicator: Relative Strength
Relative Strength has turned higher, within the structure of the RSI there still remains the clear signal for the Bearish divergence signal to play out, however the RSI should be monitored for a movement below the key 50 level as a loss of upward momentum to confirm divergence.

Black and White Technical Report: The Week Beginning 4/01/2021, FP Markets

Comments from last week:  The daily chart remains one of consolidation. Of note is last Mondays “2nd retest” of the 3636 level. The loss of price momentum (see RSI note) is holiday related with the market continuing to consolidate. This chart requires a daily close below 3636 points to signal a reversal pattern. A further close above 3726 would send a very bullish signal to market participants, with short coverings, further gains would be expected.

 

USD Spot GOLD – WEEKLY
Price structure:
The Support Resistance level at $1855.00 is the key level to monitor in the coming week. Momentum has turned higher (See RSI note below) with the next resistance level shown at $1970.0
As mentioned prior to Christmas the a, b, c pattern has played out with a key reversal now confirmed. Technically the Weekly chart displays a “down trend” so any price retracement from these levels would be required to find price support before the $1764 level to confirm a potential UP trend coming into play for early 2021.

 

Indicator:  Relative Strength
Relative Strength turns higher and crosses the key “50” level. This is a key indicator of “positive” price momentum, a continued move high would show higher positive price momentum both in the Daily and Weekly charts.

Black and White Technical Report: The Week Beginning 4/01/2021, FP Markets
Comments from last week: Gold remains one of the better technical charts with clear support and resistance levels playing out. Currently the $1855.0 level has provided price support. Further gains would confirm the a, b, c pattern has played out. The inset Daily price action shows an inverse head and shoulder pattern setting up for a bullish breakout with he “retest” of the neckline complete.

 

AUD GOLD DAILY
Price structure:
Australian Gold producers continue to find price support as the AUDUSD Gold price remains flat as the rising $AUD brings pressure on this USD Gold cross rate.  The Daily chart gives no indication of future price movements as this consolidation takes place. The HL of Mid December is an early sign of strength, but has much further to play out with a close over the $2530 level to confirm a Trend Change.

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

 

Indicator:  Relative Strength
With the RSI turning higher but remains below the key 50 level showing improving momentum. This indicator has swung around below the 50 level since August. 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 4/01/2021, FP Markets

Comments from last week: This chart remains a major headwind for local Gold producers. The strong Australian Dollar maintains pressure on operating margins. There is nothing inspiring about this price chart other than more consolidation ahead.

Primary trend remains DOWN.

 

SILVER DAILY
Price structure:
With the $26.00 Support level tested and holding, this will be the key support test level for the early 2021 open this week. This level has provided support and resistance from July 2020 and remains the key level to monitor in the coming days.

Big picture: Silver continues a new Daily UP trend.

 

Indicator: Relative Strength
Relative Strength has turned sharply higher in line with the underlying price movements and remains a good signal for further momentum gains.

Black and White Technical Report: The Week Beginning 4/01/2021, FP Markets

Comments from last week:  Last week saw a significant price swing in XAG with an OPu (outside period) set last Monday. This may take some time to resolve as both the Buyers and Sellers experienced a volatile 10% daily swing in price. Traders would look for a close over the $26.00 level to confirm a new breakout towards $27.70 with $30.0 remaining the primary target.
 

 

COPPER DAILY
Price structure:  Inventories under pressure.
The developing support level of $3.47 will remain the key level in the coming week. Last week’s inside range is considered a consolidation period and will be the key immediate support level to monitor.

Copper remains in short supply on the London Metals exchange as demand increases with the growing Chinese economy, this scenario will remain the price driver in early 2021.

 

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 so-far, this will still be monitored in the coming week. Further confirmation of a top will be shown if price moves below the $3.48 level and the RSI moves lower inline.

Black and White Technical Report: The Week Beginning 4/01/2021, FP Markets

Comments from last week:  The weekly close over the $3.47 has succumbed to a retest of this important level last week. The price structure remains very Bullish for further gains in the coming weeks. The $3.47 – $3.50 levels will remain the significant support level to watch in the coming month. The next resistance level shown at $3.80 remains the current target for this very strong move underway.

 

AUSTRALIAN VOLATILITY INDEX:
The Australian volatility index remains mildly Bullish for Equity gains as the  reading remains low towards the 13 level. This news driven volatility indicator has been in decline from the highs of March 2020 and now looks set to remain low as the Covid Vaccine begins an international rollout.

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 4/01/2021, FP Markets

Comments from last week: The sudden decline in Volatility could be viewed as a data error, however with the Covid Vaccine now being rolled out, the potential upside in Global economies has a dark cloud removed. Within Australia our economy has emerged from recession with confidence coming back into the business sector. The XVI reading is now “complacent”, this should continue to show in equity gains.

 

 

USD DOLLAR INDEX
Price structure:
The long term picture of the USD Index remains in a Primary down trend. In the short term a Bullish divergence is developing as the Relative strength Indicator makes a higher low as the DXY value set a new low at the close last Thursday. The short term view is setting up a price recovery to potentially retest the 90.66 level.

This will bring pressure onto the $AUD which in turn may help the AUD Gold price and the underlying Australian equities Index.

Indicator:  Relative Strength
While the RSI has again moved over the 30 level as a higher low is set, the indicator remains below the key 50 level. Traders would look for an RSI move over the 50 level to suggest a more significant momentum move higher is underway, this remains unlikely.

Black and White Technical Report: The Week Beginning 4/01/2021, FP Markets

Comments from last week:  The rejection high of last Monday has not been breached in the following trading days with price remaining below the 90.66 resistance level. The whole price structure remains very bearish. This will be supportive of a higher Australian dollar, placing margin pressure on the local Gold producers.

  

 

WTI CRUDE OIL
Price structure: This commodity is news driven by supply -demand.
Further consolidation under the $50.60 seems the most likely outcome for the WTI price structure. WTI has entered a Primary UP trend, so a simple consolidation period would remain a very bullish outcome in the coming weeks. A closing price over the $50.60 level would allow the WTI contract to target $61.80.

 

Indicator: Relative Strength
RSI turning higher over the 50 level and now over 70 remains in a very good place for further momentum price gains. As the indicator is now over 70, this will be monitored for a potential divergence signal.

Black and White Technical Report: The Week Beginning 4/01/2021, FP Markets

Comments from last week : West Texas Intermediate remains in a breakout move above the $42.0 level. Last week’s sell down was met with buyers to close towards the high for the week. A clear resistance level of $50.60 remains as the price target, only a strong close over this level would set the chart up for a retest of $61.80

  • Black and White Technical Report: The Week Beginning 4/01/2021, FP Markets
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