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Black and White Technical Report: The Week Beginning 28/06/2021

Black and White Technical Report: The Week Beginning 28/06/2021, FP Markets

Through technical analysis, major trends and consolidation areas can be identified and exploited for trading. But it should be remembered Technical Analysis is based on underlying economic functions, the market is constantly trying to look forward. 

Last Monday the major indices moved sharply lower, but this was completed on light volumes for the day.  The markets have begun a small range trading area as traders sift through the monetary statements released last week.

There seems to be a growing divide between the “Inflation here to stay camp” and the “inflation is transitory camp”. US 10 year yields remain trading around 1.5% a move either way from here will decisive for the equities markets.

Gold and Silver remain under pricing pressure, precious metals appear to be consolidating at lower levels.

West Texas Oil remains in an extended Bull market move.

 

XJO WEEKLY
Price structure:
The past week avoided a closing price below 7197 with only a retest of this important level taking place. The underlying market remains robust and highly tradable with gains in the XFJ (financials) and XMJ (materials).

Price consolidation above this 7197 level will provide a base and means to meet the index price target of 7715 as this remains in place.

 

Indicator: Relative Strength 14
The RSI indicator has turned lower but remains over the 70 level. A further reading under the 70 level 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 in price momentum.

Black and White Technical Report: The Week Beginning 28/06/2021, FP Markets
Comments from last week:
 Last week saw the XJO held on strong Banking stocks, the rejection of the 7406 high may set up a retest of the 7197 level in the coming week. The chart shows 4 weeks of gains from good participation in the top 20 holding the market gains. Price consolidation is an important aspect in trend analysis, consolidation at these levels would set the floor for a renewed push to the 7715 target. A weekly close below 7197 would target the lower support levels 6900 and 6737.

 

XJO DAILY
Price structure:
Last Monday the index went into a strong down day, however this was set on relatively low volume for the large move witnessed.

There are 2 types of selling “committed selling” (bearish signal) and “no buyer” days where the markets move lower only because the buyers stand back.

The Tuesday recovery is the key to this weeks market movements, as the Daily chart shows consolidation within the Monday down range.

The new trendline is being developed and remains tentative until a further test.

 

Indicator:  Relative strength 14
The sharp decline in the RSI below the key 50 level a result of last Mondays closing price below the past 11 trading days lows. With the RSI now moving back over the key 50 level, price momentum is again positive, this level should be monitored in the short term as price test current support levels. 

 

Indicator:  VOLUME
The Daily chart shows the low volume day set last Monday with strong volumes on the recovery day Tuesday. Trading volumes remain robust during the later part of the week indicating accumulation rather than distribution.

Black and White Technical Report: The Week Beginning 28/06/2021, FP Markets
Comments from last week:
 Last Friday posted an OPu, often a marker for a turning point, with Todays futures showing a 70 point + decline on the open the lower support provided by the 5 period simple moving average may provide some first line support towards the close of the day.  A retest and hold of the breakout at 7172 would be a good technical signal.

The level of 7172.0 remains the key support to hold in the coming week in the event of further declines.

 

S&P 500 WEEKLY
Price structure:
With closing price support developing along the 4150 level, last week’s record close sets up the Index to move higher in the coming week.

Of concern is the underlying Relative strength, see below.

The Weekly range has expended from the previous consolidation weeks.

Underlying primary trend remains UP.

 

Indicator:  Relative Strength Indicator 14
The Relative Strength Indicator has moved to a divergence sell signal, similar to February 2021. Although the reading has moved back to the 70 level, the indicator still remains in divergence to the price structure.

Should the RSI again show a movement below the 60 level, this would be a second bearish signal.

It should be acknowledged the RSI has also remained above the key 50 level for the past 12 months.

Black and White Technical Report: The Week Beginning 28/06/2021, FP Markets

Comments from last week: The Weekly chart has posted an outside range (OP) bar, the underlying Primary trend has not reversed, however the OP is a strong marker of market turning points.

3 Weeks ago, the Index showed the #3 line, at the time I mentioned this is often a precursor to a coming decline.

This week the 4046 level and or the 3980 level must hold for support during any further declines.

Price consolidation above 3980 may follow the current reversal signal.

 

S&P 500 DAILY
Price structure:
The pivot point set on Monday has preceded the move back to move under the extend and previously broken trendline. 

The trading range from 4062 – 4230 looks to have been broken to the upside, traders would monitor the Index for a retest of the breakout level (4230). This will be the important level to hold in any retracement move. 

 

Indicator: Relative Strength Index 14
From the sharp movement down below 50 to the equally sharp movement up over the 50-level putting the Index back on a positive momentum path.  

Traders would again monitor the Relative Strength for another divergence signal should the current reading move over the 70 level.

Black and White Technical Report: The Week Beginning 28/06/2021, FP Markets
Comments from last week:
 Last Wednesday’s pivot point reversal first breaking the long-term trend line has set the stage for Friday’s sharp decline. Daily price support levels remain at 4062.

The underlying trend has not changed; however further consolidation may already be underway between 4062 and 4230. Relative Strength short term has turned lower below the 50-level reflecting the current loss of momentum. With a further swing below the 30 (last seen during October 2020) the underlying price would be monitored for a reversal Buy signal.

 

USD Spot GOLD – DAILY
Price structure:
Gold settled into consolidation above the key support level of $1764.30, the pennant pattern may be a continuation pattern and further test the lower target of $1725 in the coming days. 

The Weekly trendline has been overlaid on the chart to show the $1725.0 level is in confluence with this trendline.

Trader would look for a reversal signal at this level to confirm support.

 

Indicator:  Relative Strength 14:
The turn in the Relative strength from last week may be the early signal for a Bullish divergence signal, however this is NOT the case with Friday’s higher reading in line with the higher close on the chart.

Relative Strength must now move back to the 50 level to show any real sign of price strength.

Black and White Technical Report: The Week Beginning 28/06/2021, FP Markets

Comments from last week: Should price close below the trendline or the $1863.66 level the sellers would have control: The Gold price has moved to test the lower support level of $1764 on some impulsive moves.

This is a significant move underway; the chart shows the WEEKLY trend line overlayed intersecting the $1725 support level.

The $1725 level will be a very important level to hold in the coming days and should be monitored for a Buy signal.

 

SILVER DAILY
Price structure:
The impulsive move lower 7 trading periods ago remains the dominant trading period on this daily chart with last weeks price action developing into a consolidation pennant.

A breakdown to test the $24.60 would be the logical move from here.

Silver has remained within a trading range of $24.00 to $28.40 for the past 7 months.

There is no evidence of a breakout either way. However, Silver remains highly tradeable within this range.

 

Indicator:  Relative Strength 14
An indication of price momentum using the Relative strength Indicator (14) as the reading has moved and remained below the 50 level. This type of movement could be expected in this type of price consolidation.

The divergence sell signal had first technically failed, however remained the precursor to the current decline. 

A full bearish signal will be displayed with RSI moving below the 30 level and would be monitored for a Buy divergence signal.

Black and White Technical Report: The Week Beginning 28/06/2021, FP Markets

Comments from last week: From last week: Friday’s shooting star candle may follow thru in the early part of this week with lower prices.

The observation of support is displayed on this Daily chart with Silver first testing the $27.00 level (Wednesday) and finally closing on the historical support level at $26.00.  ($25.80)

With the impulsive movement last Thursday along with the short cover rally on Friday afternoon, further declines could be expected to test the $24.60 support level.

Taking a wider view Silver remains within a large consolidation area between $24.00 and $28.40. 

RSI: An indication of price weakness is showing in the Relative strength Indicator (14) as the reading has moved and remained below the 50 level. This type of movement could be expected in this type of price consolidation.

 

AUD GOLD DAILY
Price structure:
Strength in the $AUD and weakness in the $USD Gold price has seen the XAUAUD grind lower toward key support at $2300.00.

Local producers, NCM, NST, SLR, GOR have traded well in light of this price weakness, however continued weakness In this index may follow through into the local producers in the coming days.

 

Indicator:  Relative Strength 14
RSI has moved below the 50 level in line with the declining price action, this is now a bearish signal given the underlying price action is declining on expanding daily ranges. Last Friday’s uptick in the indicator is important and will be monitored for a further bullish signal, eg a rise above the key 50 level.

Black and White Technical Report: The Week Beginning 28/06/2021, FP Markets
Comments from last week:
Following the decline in the USD Gold price and the somewhat stable $AUD the XAUAUD price has fallen below the Bullish flag structure.

Friday’s IP inside range shows the market in balance, so a breakout either way will give an indication of market direction.

Support shown at $2300 will be important to hold in the coming days on any further price weakness.

 

COPPER DAILY
Price structure:  LME Inventories remain historically low as the Chinese release stockpiled product.

The impulsive price move of 2 weeks ago remains the dominant feature in the Daily Copper chart.

Last week’s lower opening price ($4.13) and following rally higher is a good signal the current low has been set.

As support becomes resistance, this week may see a retest of the key $4.50 level, a further close over this level would be a bullish signal for further gains.

Rejection of this level could see substantial selling enter the market with a retest of $4.00 support. 

 

Indicator: Relative Strength 14
Confirmation of a loss of momentum is shown when 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 retest of $4.00 underway. The RSI requires a continued reading above the 50 level to signal positive 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 28/06/2021, FP Markets
Comments from last week: 
Last week’s move in copper is regarded as an impulsive move (large range) falling below the Gap window of 8 weeks prior. The current movement has also broken the short term trendline.

This week the $4.00 support level is now in play, traders should monitor for this level to hold. A further price break of $4.0 would put Copper into a “corrective” move with $3.80 as the next target.

 

AUSTRALIAN VOLATILITY INDEX
The down day set last Monday also saw the XVI spike higher, currently the underlying Volatility remains steady below the key 13 level, traders should monitor these levels as an indication of market sentiment.

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 28/06/2021, FP Markets
Comments from last week:
 As the US markets VIX declined the Australian XVI also collapsed back below the 13 level. This remains a good signal for further gains in the equities markets as the price of risk cover declines.

 

USD DOLLAR INDEX
Price structure:
Daily consolidation has developed in the DXY with current support at 91.66 remaining in place. This would be expected following a strong series of moves from the lows below 90.85.

The impulsive moves would be also be expected to continue given the lower shadows of the current daily bars indicating buyers at a lower price.

The expectation would be for a continuing retest of 93.45.

 

Indicator:  Relative Strength 14
While the RSI has made a sharp recovery above the key 50 level and 70 level in line with the now 5 impulsive up bars within the last 14-day period.

Friday’s shorter-range bar is a sign some price consolidation may occur at this level.

Continued strength may see a weaker $AUD.

Black and White Technical Report: The Week Beginning 28/06/2021, FP Markets

Comments from last week:  Impulsive! playout in the USD following the Federal reserve press conference. Without regard for resistance levels this primary movement has the potential to retest the 93.45 level.

WTI CRUDE OIL
Price structure: This commodity is news driven by supply -demand.

West Texas remains in an extended price move higher.

The West Texas contract remains positive with a new higher low and higher high during the past week. 

The first observation will be of the continued support of the short term trendline.

Resistance shown at $75.20 remains the preferred target, however consolidation above $66.00 support level the potential outcome following 4 weeks of gains.

 

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

Black and White Technical Report: The Week Beginning 28/06/2021, FP Markets
Comments from last week
: The West Texas contract remains positive with a new higher low and higher high during the past week. Resistance shown at $75.20 remains the preferred target, however consolidation above $66.00 support level the potential outcome following 4 weeks of gains.

  • Black and White Technical Report: The Week Beginning 28/06/2021, FP Markets
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