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Black and White Technical Report: The Week Beginning 03/05/2021

Black and White Technical Report: The Week Beginning 03/05/2021, FP Markets

Major Indices have again posted warning signals of impending price weakness in the coming weeks. This may suit short position traders, but more importantly offer long side traders a place to take profits. 

The Weekly price bar of two weeks ago displays a lower shadow, this signals a selling period during that week. This may again follow through in the coming weeks, there remain some important support levels to defend.

What cannot be ignored is the EPS component of the US markets moving to all time high (38.60).

The USD Index, DXY, has posted a strong reversal signal, the outcome will be commodity prices coming under pressure.

The overall Primary trend remains firmly UP for commodities, however price consolidation is continuing to show in Gold and Silver and the West Texas Oil price.

Copper sets an all-time high price but returns to a Nine-year high closing price, but last week put in a reversal signal.

 

 

XJO WEEKLY
Price structure:
Last week’s short range down close bar again signals the market is at a decision point, as buyers have been unable to push higher over the 7130 level. 

Price still remains outside of the Bollinger Band; historical evidence shows the price only remains outside the bands for a short time. This observation and the warning bar #3 two weeks ago would indicate the market may move lower to test the 6737 level, this being a key support resistance level over several years and at this point in time the approximate value of the Bollinger 20 period centre average (green).

Only a close over the 7130 level would give buyers further confidence to move the market higher.

 

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

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 03/05/2021, FP Markets

Comments from last week: Last showed a 3-point decline between the open and close for the week. What is significant is the lower shadow indicating a sell off during the period.

This type of #3 bar can indicate a warning of further selling in the coming 2 week’s. The Weekly low of 6905 points will be the warning level of early weakness.

The weekly key support level of 6737 remains as the first major support level to hold should the Index show further weakness.

XJO DAILY
Price structure:
Thursday’s high also posted a FO (fake out) reversal signal  followed by Fridays larger range down close bar also setting a valid pivot point reversal. With price sitting on the 5 day simple moving average, the potential move is to the lower side to test the daily support level of 6837.

 

Indicator:  Relative Strength
Currently a divergence signal is not in play as the RSI moves lower without firstly crossing back above the “70” level.

But the reading does show Relative strength moving lower towards the 50 level.

This should now be monitored for a further move lower on any price weakness. 

 

Indicator:  VOLUME
Overall volume has been increasing as price declines, Last Friday’s volume was not outstanding leading into the weekend. Further price gains would again need strong volumes to confirm broad market participation.

Black and White Technical Report: The Week Beginning 03/05/2021, FP Markets
Comments from last week:  The overlay 5 period simple moving average has indicated closing price support; however the average has turned sideways in line with last week’s mid-week sell downs attempt to retest the 6837 level

To build a bullish case, the Wednesday low and Thursday’s range make up a Bullish pivot point, although Friday’s close has not been decisive.

Traders should look for a close over Monday’s high of 7094.8 for a bullish continuation trading above the 5-period simple moving average.

 

S&P 500 WEEKLY
Price structure:
The S&P Weekly chart has now displayed a very short-range bar following the bar type #3 of 2 weeks ago.  Buyers have become exhausted following 4 weeks of gains.

The expectation is for a retracement to confirm the 4114.0 level, and potentially a further retest of 3980.0.

This will not change the underlying Primary UP trend, however a period of trading range consolidation may be underway.

 

Indicator:  Relative Strength Indicator
The RSI observation remains the same and is currently reflecting stronger price momentum as the indicator moves higher over the 70 level, moving sideways, this is not a level of over brought, and only indicates very strong momentum, and can last for many weeks.  (This type of momentum is often a precursor to profit taking.)

Should the RSI show a movement below the 50 level, this 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 03/05/2021, FP Markets

Comments from last week: The Weekly bar shows a 1point gain for the week, however the bar also has a longer lower shadow, indicating the #3 bar, this type of mid-week sell down can be indicative of further selling in the coming 2 weeks. The support level of 4114 remains as the support level to hold. As this type of #3 bar shows selling, this can also lead to a consolidation period during the coming week. A closing price below 4114.0 would be the first bearish signal for a potential short-term top. Overall, the RSI is currently reflecting stronger price momentum as the indicator moves higher over the 70 level, this is not a level of over brought, and only indicates very strong momentum, and can last for many weeks.  (This type of momentum is often a precursor to profit taking.)

S&P 500 DAILY
Price structure:
The Daily chart of the S&P 500 shows a very clear divergence signal in the Relative Strength. (see below).

Last Thursday the S&P posted an outside period day (OPu), the daily ranges have remained short indicating consolidation. A retest of  the Daily 4100 could be expected prior to a move higher, but this may take a few weeks to play out.

A closing price below 4100 would set a very bearish signal and trap many buyers above this level leading to a retest and potential break of the underlying Trendline.

 

Indicator: Relative Strength
Relative Strength short term has turned lower below the 70 level. The RSI should be monitored for a movement and continuing close below the 70 level as price weakens.

A clear bearish divergence “sell” signal is now in place.

Black and White Technical Report: The Week Beginning 03/05/2021, FP Markets
Comments from last week:  Daily consolidation (bar sandwich) shows the indecision on a daily basis. The daily level of 4100 is the key support level to hold in the coming days. As the daily ranges are large indicating higher volatility this type of price pattern can breakout either way, higher or lower.

As the Weekly chart contains the #3 bar the breakout lower would take preference in the short term.

Support levels, 4100 and 3940 will be the key observation this coming week.

As upward price momentum may be subject to some profit taking a sideways movement could be expected, this would now be monitored for a Bearish divergence signal.

USD Spot GOLD – DAILY
Price structure: 
A new Primary trend is now underway.
The Daily $USD Gold price has spent the past week holding above the very important level of $1764.30 with resistance developing at $1797.0.

A breakout to the high side would be very bullish for further gains.

A change in bullish sentiment would be required to close the price below $1764.30, but this would be a very bearish signal with the potential for a sharp move lower.

$AUD Gold stocks are attempting to show a basing formation from recent declines, the sector should be monitored for further price gains.

The smaller Australian speculative stocks will remain news dependant and price dependant on the AUDXAU price chart. (see below).

 

Indicator:  Relative Strength
Relative Strength turns lower and remains above the key “50” level in line with the current consolidation rage developing. This is an early signal of changing momentum and could be monitored for a further close below the 50 level.

Black and White Technical Report: The Week Beginning 03/05/2021, FP Markets

Comments from last week: US dollar Gold has not followed through higher last week; however, this retest of the 1764.30 level is an important development for further gains in the coming week.

The primary trend remains UP as this consolidation phase take place, a short term trend line is now in place.

Resistance shown at 1797.0 is the short-term resistance level and remains the go to level for a further price breakout. 

A closing price below this $1764.30 level would be a short-term bearish signal.

This will bring price consolidation in the Australian listed Gold producers.


SILVER DAILY
Price structure:
Silver has remained within a tight range around the $26.00 level, a good signal of impending strength.

The market has attempted to sell down on many days only to fond the buyers waiting.

A short term trendline is in place, this should be monitored for a price breakdown below this line. Price weakness would target the $24.60 support level. However the favoured move is to the upside as the Relative strength indicator remains above the 50 level. 

 

Indicator:  Relative Strength
A good indication of price strength is showing in the Relative Strength Indicator (14) as the reading remains over the key 50 level during this period of consolidation.

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

Black and White Technical Report: The Week Beginning 03/05/2021, FP Markets


AUD GOLD DAILY
Price structure:
Australian Gold stocks continue to find early support as the AUDUSD Gold price sits at the $2300 resistance level. The underlying ascending pattern is Bullish  with  3 sucessive lows in place, the expectation is for a breakout higher to continue testing the downtrend lines in place from 2020. 

This is a very good development in the AUDUSD Gold price and offers traders opportunities in the small Gold producer space including the GDX – ETF.

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 level in line with price gains to reconfirm a valid RSI buy signal. 

Last week’s downturn indicates a slowing of upward momentum, this should now be monitored for a move below the “50” level as a signal of price weakness.

Black and White Technical Report: The Week Beginning 03/05/2021, FP Markets

Comments from last week: Overall a sideways consolidation in price is developing while price remains below the 2294.0 level. The ascending pattern can lead to a breakout higher and would provide price support for Australian listed Gold producers.

COPPER DAILY
Price structure:  Inventories remain historically low.
Copper remains trading at a nine-year high.
The “Gap open” is a sell signal, the Weekly bar is displayed as a Shooting Star reversal and the bar has tested the all-time high set in 2011, but closed below this level, hence a Fake Out (FO) move trapping buyers at the high price.

Expect price to move into the GAP area around $4.36 as the potential retest of this breakout move.

The chart remains very bullish for further gains, although traders may take profits in the short term.

 

Indicator: Relative Strength
Relative Strength has moved just above the 70 level and higher than the earlier reading, this constitutes a fail in the potential Bearish divergence signal. 

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 03/05/2021, FP Markets

Comments from last week:  Last week’s close shows a very strong bullish continuation move in the price of Copper. This commodity remains on track to retest the $4.50 level. A daily close over this $4.50 level would be a very bullish signal for further gains.

Copper remains in a very strong Primary UP trend.

 

AUSTRALIAN VOLATILITY INDEX
The benign reading in the XVI remains a positive for Australian equities. The higher midweek range shadow shows volatility can easily become elevated as markets enter period of price volatility.

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 03/05/2021, FP Markets
Comments from last week: Current volatility reading remains positive for further gains within the Australian equities sector.

Traders should be aware of the old adage that low volatility leads to high volatility and visa versa as we are currently seeing after many years of elevated readings.

USD DOLLAR INDEX
Price structure:
Economic strength is returning to the US economy, this impulsive move set last  Friday is an important development. Resistance remains at 91.66, a breakout over this level would be very Bullish for the USD and relatively Bearish for Commodities and FX crosses.

 

Indicator:  Relative Strength
While the RSI has made a sharp upward turn while below the 50 level, this will be monitored for a cross of the “50” level as confirmation of upward price momentum.

Black and White Technical Report: The Week Beginning 03/05/2021, FP Markets
Comments from last week:  Continued weakness in the USD Index denies the call for a Bullish flag breakout, the continued decline in price is now testing lower levels at 90.66. A breakdown below this level would send a strong bullish signal to the commodity markets.

WTI CRUDE OIL
Price structure:  This commodity is news driven by supply -demand.
West Texas remains above the KEY $61.80 level, however, remains below resistance of $66.0.

Further price consolidation at these levels is expected, historically the chart shows this as a major price zone going back many years.

A breakout over this level would first target $75.20

Underlying Primary Trend remains UP.

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

Black and White Technical Report: The Week Beginning 03/05/2021, FP Markets

Comments from last week The bullish breakout 2 weeks ago has failed to immediately follow through to higher prices. The “tentative” trendline has again been moved to encompass last week’s bar. 

The resistance level of $66.00 remains the key level to reach as the current price remains above the $61.80 level. 

WTI remains in a Primary UP trend.

  • Black and White Technical Report: The Week Beginning 03/05/2021, FP Markets
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