Black and White Technical Report: The Week Beginning 19/07/2021

Black and White Technical Report: The Week Beginning 19/07/2021, FP Markets

US 2nd Quarter reporting underway with the markets showing signal of exhaustion by the buyers.


Within the major indices relative strength divergence is beginning to show along with some key reversal signals in the price chart.


This week the Nasdaq daily chart has been added and will be built on over the coming weeks.


Gold with 3 weeks of gains continues to outperform, while Silver remains within a trading range and unconfirming of a general Bull market in the precious metals.

 

Volatilities measured in the XVI and VIX remain subdued, a strong signal the current retracement in equities may be short lived.

 

XJO WEEKLY    
Price structure:
A series of weekly bars (6) sitting side by side equals consolidation, these periods can last many weeks to months before a decisive breakout. Last week showed an inside bar up close, (IPu) but remains indecisive about the next direction breakout.

Last week’s break in the trend line has meant the trendline has moved and returns to “tentative”.

The underlying primary trend remains UP with 7715 as the next target.

 

Indicator: Relative Strength 14
The RSI indicator has turned sideways and moved below the 70 level. A continued reading under the 70 level would put traders on alert for some form of slowing divergence signal.

During time of consolidation the RSI will normally decline as price moves sideways.

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

Black and White Technical Report: The Week Beginning 19/07/2021, FP Markets

Comments from last week:  Another week of consolidation in the XJO, for long term holders this type of price movement is often the precursor to higher prices, as the underlying Primary trend is UP, the current secondary consolidation is a part of that trend function.

The support level shown at 7197 remains in place as does the price target of 7715. 

To achieve this level and higher the underlying 4 banks, particularly CBA along with the larger weighted equities WES, WOW, APT, CSL must continue to hold support and to push higher.

The current confirmed trendline ( 3 touches) remains intact with last week closing on the line.

 

XJO DAILY  
Price structure:
With the 3 low points now completed, this signals the next move to be a breakout. The two levels of interest are the 7406 resistance and the 7216 support level.

Further detail shows up by observing the last 4 days in the week have remained above the Monday closing high, a strong sign of buyer support. (see volume note). Ultimately a move higher would be the favoured direction. 

 

Indicator:  Relative Strength 14
As price consolidates above the 7216 level, relative strength will not provide a tradeable signal until we see a price breakout either side of the current range. But it is encouraging to see the RSI remain above the key 50 level.

February and March 2021 show a similar RSI pattern  prior to the higher breakout.

 

Indicator:  VOLUME
Trading volumes again remain robust during the later part of the week indicating accumulation rather than distribution.

Black and White Technical Report: The Week Beginning 19/07/2021, FP Markets

Comments from last week:  The Daily chart of the XJO clearly displays a developing consolidation between 7406 and 7216. The structure of this pattern is almost complete with Two identified low points and the third to be confirmed.

Today is expected to be positive, this would confirm the 3rd low point and current retest of the 7216 level.

This week look for a closing price above 7381 as the first signal of a potential breakout higher.

 

S&P 500 WEEKLY
Price structure:
A new high for the week, but rejection to see the Index close on the low of the week. The trendline remains tentative at this point in the chart with 4240 remaining as the first level of any real price support.
Until the first level of support breaks the Index will be in consolidation above 4240, these periods can last many weeks before a breakout in either direction.
With Relative Strength (momentum) turning lower the Index may be displaying a short-term top in place.

 

Indicator:  Relative Strength Indicator 14
The Relative Strength Indicator has re-emerged as a developing divergence sell signal. The Sell line is shown around the 65 level. It can also be observed that the RSI can track sideways as price consolidation takes place.

Black and White Technical Report: The Week Beginning 19/07/2021, FP Markets

Comments from last week: The new support level of 4240 is now confirmed as the lower shadow of last week’s bar attempted to retest this level. Currently no evidence of a topping pattern or weak price structure is in place. The Primary breakout is underway, traders would monitor the 4240 level for an early warning of potential Trend failure.

S&P 500 DAILY
Price structure:
Last Wednesday set an Outside period (OPd), this can be highly indicative of a turning point set in place.

With price testing the uptrend line a break below this level targets the 4240-support level. 

Further evidence of a bearish week ahead can be seen in the large range of Friday’s bar, this could be described as impulsive following the shorter ranges earlier in the week.

 

Indicator: Relative Strength 14
This indicator is now a divergence sell signal with a first swing below 70 following the lower high set on Tuesday – Wednesday last week. The current reading of the RSI is showing a lower high as the price makes a new mid-week high, an early indication of Bearish divergence is underway. 

Black and White Technical Report: The Week Beginning 19/07/2021, FP Markets

Comments from last week:  With a new high price showing in the Daily chart following last Thursday’s retest of the developing trendline. Friday’s pivot point bar is also a large price range bar and often an indicative signal for further gains.

The defined resistance / support level of 4240  will be the key level to hold should the market fail to continue the current breakout momentum.

NASDAQ DAILY
Price structure:  Our first look at the NASDAQ
Underlying Weekly chart shows the primary trend of the NASDAQ is UP. 

The Daily chart of the NASDAQ 100 has broken the short term trendline with a decisive second close below the 14910.

The first support level is 14595, this level should be monitored for daily support early this week.

The first real key support only shows up at the historical resistance level of 14073, price moving to this level would also display a break of the long-term trend line.

Indicator: Relative Strength 14
The Relative Strength Indicator has turned sharply lower following 2 weeks registering a reading above the 70 level. This has turned in line with the price reversal, a reading below the key 50 level would be a very bearish signal of failing price momentum.

Black and White Technical Report: The Week Beginning 19/07/2021, FP Markets

USD Spot GOLD – DAILY
Price structure:
Last Friday Gold set a Daily reverse pivot point, following last Wednesday’s breakout higher, this following 3 weeks of gains, this profit taking has set the stage for a retest of lower levels down to $1764.0. The first level of real support will be the psychological level of $1800. 

Underlying trend remains indecisive. And Gold remains highly tradable while support and resistance levels remain to be tested.

 

Indicator: Relative Strength 14
The earlier Bullish divergence signal from January is now complete as the Relative Strength has now moved back to the 50 level, a signal of decreasing price momentum and should be monitored for a further move lower. 

Black and White Technical Report: The Week Beginning 19/07/2021, FP Markets

Comments from last week: The Daily Gold chart is showing a secondary consolidation pattern that can be a bullish pattern with a breakout higher or a bearish pattern with a breakout lower. Price momentum is increasingly positive (see RSI note) 

Inspection of each daily bar shows an indecisive market, until a momentum move is made further consolidation may persist.

SILVER DAILY
Price structure:
Short range consolidation now best describes the Daily silver chart. The current support level shown at $25.52 is being tested. Last Friday’s large range bar is a bearish signal for further declines, potentially to retest the $24.60 support level.

 

Indicator:  Relative Strength 14
In the shorter term observation, the RSI last week shows a new move below the 50 level as price continues to consolidate.

Black and White Technical Report: The Week Beginning 19/07/2021, FP Markets

Comments from last week: $26.00 remains the key support resistance level for Silver. The price consolidation area has narrowed with resistance at $27.00 and support shown at $25.52. The past week has developed into a Bullish Flag, although inside the consolidation area the breakout higher should test $27.00 as first point of resistance.

AUD GOLD DAILY
Price structure:
This has been a great chart for the local Gold producers as the XAUAUD price remains above the key $2400 level. Friday’s inside day (IPd) shows the market coming into balance under the resistance level of $2477. A break of the IPd low price would give direction in the coming days, with the important $2400 remaining a key psychological level to hold. 

 

Indicator:  Relative Strength 14
Relative Strength moving back over the key 50 level is a positive for price momentum and the continued rise in the RSI should now be monitored for a slowing of momentum. 

Black and White Technical Report: The Week Beginning 19/07/2021, FP Markets

Comments from last week:  With a price rally underway, AUDXAU has again moved over the important level of $2400 as the “shooting star” shown 2 weeks ago has failed. (Bullish signal) 

The broader picture shows the recent Higher low is now set, a follow-on breakout higher over the  2477.0 level would set a very positive tone for the Australian listed Gold producers.

COPPER DAILY
Price structure:  LME Inventories remain historically low as the Chinese release stockpiled products.
China’s strong GDP numbers may underpin the price chart going forward.

The growing resistance of the midpoint $4.33 level should be of concern for the bullish trader.

With last week’s bar showing a long lower shadow a breakout above $4.33 would be imminent in the coming days.
Failure to regain this level may see a fast retest of the $4.00 support level as a continuation of the a,b,c structure.

 

Indicator: Relative Strength 14
Confirmation of a loss of momentum is shown as the RSI moves below the “70” and now testing the 50 level, a further movement below 50 signals a loss of positive momentum and would confirm a potential retest of $4.00 underway. The RSI requires a continued reading above the 50 level to signal positive price momentum.

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

Black and White Technical Report: The Week Beginning 19/07/2021, FP Markets

Comments from last week:   The current price of Copper ($4.35) remains trapped at the Midpoint resistance level of $4.33. With last week’s bar showing an upper and lower price shadow, the underlying market remains in consolidation at this level. The current price structure is a bearish flag with the potential to break down to retest the $4.00 support level in the coming weeks.

AUSTRALIAN VOLATILITY INDEX
Bullish equities, how-ever the past 2 weeks now show the high spikes in Volatility and may be the early signal of increasing price volatility by way of increased forward option premium. A reading over the 13 level is a bearish signal for equities.

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 19/07/2021, FP Markets
Comments from last week:
 Last week’s spike in Volatility reflected the sudden change in buyer sentiment as inflation numbers were released along with Employment numbers. What should be noticed on this Weekly chart is the final reading on Friday is well off the 18+ midweek high reading. 

This week may see a further decline as major equities rally into new highs.

USD DOLLAR INDEX
Price structure:
Price structure remains strong, in close observation of the daily price bars the down close bars rarely follow thru lower as buyers lift the price immediately. This DXY chart may remain range bound between 91.66 and 93.45. The inverse Head and shoulder pattern remains in play with the 94.85 high target area still in place.

In conjunction with the RSI notes below the key level of immediate support is 92.07.

Indicator:  Relative Strength 14
Relative Strength has set a new high over the 70 level and dipped below, to move higher to make a lower high as price makes a closing higher high. Bearish divergence is now in place.

Black and White Technical Report: The Week Beginning 19/07/2021, FP Markets

Comments from last week:  USD index price is currently rejecting from the “neckline” area currently around 92.8. The 93.45 level remains the primary target, but a retest of 91.60 the first indicative target level as Bearish price divergence shows in the RSI currently leading to lower values. The underlying price structure remains Bullish.

 

WTI CRUDE OIL
Price structure:  This commodity is news driven by supply -demand.
The first strong signal of rejection in the OP of 2 weeks ago has played out with price rejection at the $75.20 level. This sets up the potential retest of $66.00 in the coming days.

The underlying primary trend remains UP, with the potential to see several weeks of consolidation as part of the trend price structure.

 

Indicator: Relative Strength 14
RSI turning lower over the 70 level, in line with current price moves only confirms the underlying price momentum is slowing. 

The RSI may be showing a larger time frame divergence signal from Q1 2021 high. Look for a swing below the “60” level to confirm.

Black and White Technical Report: The Week Beginning 19/07/2021, FP Markets

Comments from last week: Last week’s OP (outside period) has become the first strong signal of price rejection at the $75.20 level. The low of the weekly range also broke below the current trendline.

Give the recent strong price run of the WTI contract further consolidation at these levels would be a very Bullish sign for further gains toward the long term target of $100.0

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