XJO WEEKLY
Price structure: Trend continuation.

A shorter-range week but a new closing high as the market focuses on the Geo political events. The current 5% range of movement from the 8083-support level to last week’s high point is consistent with historical observations before consolidation takes place. The key Weekly level to hold this week remains at 8385 points. As the Index movements remain within a wide up sloping channel there is room for higher prices within the channel. 

Indicator: Relative Strength 14:  Bullish

Relative strength has turned higher in line with the rejection of lower prices, and importantly still remains above the key 50 level indicating overall positive momentum. Only further movements higher towards the 70 level can set a continuing bullish signal for further higher price movements.
Should the RSI turn lower to move below the 50 level, the strong indication is for negative momentum to develop leading to Trend failure and further declines.

Comments last week: The XJO continues to trend higher, last week the final closing price remained above the 8385 level set during the second week of October, this is an important observation showing the buying will to hold into new all time highs. The new extended price target is 8687 points.

Although the Index is heavily weighted with the 4 banks and large Industrials the more important message is that sentiment remains strong. The FO is often a take profit point when the market exceeds a previous high and history shows some consolidation often follows this event bar.

XJO DAILY
Price structure: 3 Spike highs

The Daily view of the XJO Index shows 3 higher high rejection points, often a reversal pattern prior to a decline. As with the Weekly chart the Daily level shows 8385 as the potential Weekly support level with the 8330 level as the Daily support level, also at the short trendline.  This week further consolidation is possible above the 8330 level, a price breakout above point 3 would be viewed as an exhaustion movement and markets may see sharp profit taking at this level. The Volume study indicates falling volume into the close of the week. Should the Index breakout higher traders should look for Volume confirmation.

Indicator: Relative Strength 14:

The Relative strength Indicator (14) has turned higher into the close last Friday while returning above the key 50 level, the outlook shows price is gaining momentum as the divergence signal moves further into the past. With the move higher towards the 70 level, Traders would be looking for further Hold signals should a continued higher price move occur with the RSI remaining above the “50” level targeting 70.

Comments from last week: The Daily chart shows an equally bullish setup with the market setting a high of 8446 last Tuesday with a fast retest of this level underway. It remains very bullish when the previous high point can be exceeded within 5 or 6 trading periods. Primary UP trends are now in place within the 2 time frames.

S&P 500 WEEKLY: Divergence remains. 

In a shortened trading week, the S&P500 has produced a short-range bar above the 5853 support level. The strong close at the high of the week while also indicating an all-time high price suggests further gains in the immediate coming week. With the Index now moving to the upper channel line further gains may become limited in the coming weeks. The underlying Primary trend remains UP.

Indicator: Relative Strength Indicator 14. 3rd Divergence in the background

Relative strength has turned sideways on the price movement higher. The key observation remains, RSI value has remained over the key 50 level, momentum is weakening during this Primary UP trend. The Divergence signals so far have not followed through into a full price reversal lower. 

A turn lower towards the 50 with any Index price movement below the 5853-point level will re-assert a bearish RSI signal. The current position of the Relative strength indicator has a failed second Bearish divergence.

Comments from last week:  The 50% retracement level has offered immediate support for trading last week with the higher close bar now inside the down close range. Buyers willing to hold against a previous down close range remains a bullish signal for further gains. The 5853 level is now the first key support to hold this week. The relative strength divergence signal remains in place.

SPX DAILY Price Structure: Island Top failure

The Island top, pattern failure, confirms the bullish strength of trend as the market closes (6032) over the key 6000 point level. Last Thursday’s close over the Island top high point shows buyers willing to hold over the US extended weekend holiday. The Island top resistance level is 6020 points this should now be viewed as the short term support level in the coming days. As the Index remains extended above the 200 day moving average, a decline back towards this level would be indicated with a close below the short term trendline.

Indicator: Relative strength 14. Potential divergence.

Relative strength Indicator has turned higher and remains below the 70 level into last Friday’s close, traders should consider a decline below the 50 level as a strong Sell signal. Only with a continued move higher above the “50” level the expectation of further advances remains. Relative strength is a momentum indicator, only the swing back higher towards the key 70 level would set a very strong Bullish signal that should not be ignored.

Comments from last week:  The Island top in place with current price movements now closing the “Gap” as price remains above the short term trendline. Last Friday’s range is short so the risk of some profit taking and reversal remains. To remain bullish a close over the highs of the Island top pattern is required.  Since the formation of the Double top the Index has ascended into a high Wedge pattern. This type of long term pattern development is an ultimately bearish. Traders would look for a close below the short term trendline to indicate a Bearish break in the pattern.

NASDAQ (100) DAILY Price structure: Island Top remains.

The Island Top in the Nasdaq Daily chart has provided some resistance in the past 4 trading days. During the past week the short term trendline was again tested followed by the strong close on Thursday last week. A follow through could be expected this week to fully retest the 21,182 Island high point following last Thursday’s pivot point setup. Overall the chart remains very bullish in structure, the constant failure of price to follow through lower on key reversal patterns confirms this view.

Indicator: Relative Strength 14: Bearish

Relative strength has now turned sideways to higher while below the key 70 level, mirroring the changing price direction / momentum. The rising RSI value can provide some early insight for the Major Primary UP trend, with a falling RSI leading to a Down trend continuation. A further move below the 50 level would send a very Bearish signal not to be ignored.

Comments from last week: Strong trendline support highlights last week’s price action. Currently a move back into the Gap is underway. Closure of the Gap with price moving over the Island highs would of a very strong breakout signal from the ascending pattern that has developed from early July 2024. The short term trendline is now the key support point, should the price move below this level of 20,500 the market may see a sharp profit taking event as traders move to protect profits.

USD Spot GOLD – DAILY: Bearish Flag.

Strong rejection at the $2717 resistance level setting a lower high in the Daily chart. The last 4 trading days now show a Bearish Flag pattern with the expectation of a breakout lower towards the $2570 level. The overall price structure from the initial September breakout is now a consolidation range below the $2766.0 level. Should price move below the $2570 level a Primary trend change to down is indicated.

Indicator: Relative Strength 14: Swing Lower continues.

The RSI has turned sideways to finish below the 50 level. This is a bearish signal, and it remains a strong observation price will decline further in the coming weeks on declining momentum.  Price decline from this level will see the RSI move lower towards the 30 level. This is the message from this momentum indicator, consolidation can equal changing directional momentum.

Comments from last week: A Primary movement is described as price action where the bars stand on top of each other, this best describes last week’s price action as this retest of the highs takes place following the 3 bar reversal pattern. Current resistance of $2717.0 may offer some level of consolidation within this current advance. Taking a wider observation and until a breakout occurs USD Gold remains within a developing trading range.

AUD Gold Price structure:  Bullish Pivot failure

Gold sales in Australia use the Australian Dollar Gold price as the reference for valuations. Based on the $USD Gold price with the currency exchange rate factored in. Movements in either will drive the $AUD price.
The Daily chart shows the Pivot point discussed last week has failed with a small reversal, within the Gold chart (above) $USD may decline further during this week and bring the AUD Gold price lower. Last week the small range tested the “midpoint” of the prior Pivot bar, this can be a bullish setup if this $A4066.0 level holds. The overall price structure remains in a Primary UP trend.

Bearish for Gold producers: NST, EVN, GOR, NEM.

Relative Strength 14: 

Relative strength (momentum) has moved lower towards the 50-level indicating weakening momentum in the current look back window. A further cross below the 50 level will confirm a significant loss of upward momentum.

Comments from last week: AUD Gold has closed at an all time high following the strong advance in the USD Gold price and the relative stability in the $AUD at $0.6500. The overall price structure remains in a Primary UP trend with last week setting a bullish pivot bar setting the stage for higher prices.

SILVER Price structure: Bearish consolidation.

From a very Bullish 3 bar reversal observation to a Bearish resistance level at $30.67. $USD silver has again tested the short term trendline and remains  below the developing resistance level. Looking back to the recent high set-in late October, the chart is marked with several impulsive down close bars. Last Wednesday the chart posted a FO Fake out low below point (C) this can be a short term bullish buy signal. Price consolidation at this level has the potential to build a stronger base, before a new rally. Traders could use the $29.50 level as the trend point to indicate a new Primary down trend developing.

Relative Strength 14:

Relative strength is now trending in line with the underlying price structure. The current reading remains below the key 50 level but rising, showing increasing Bullish momentum movement is in place as the Daily closing price moves higher. This indicator should be monitored for a move further below the 50 level as an indication of momentum failure.

Comments from last week: Although lagging the price movement seen in USD Gold, Silver remains very Bullish following last week’s move higher from the 3 Bar reversal pattern, with the consolidation above the $30.67 level retesting this level several times, followed by last Friday’s high close indicates the potential for further gains this week. The Trendline has now been adjusted for the (c) low point, a Bearish reversal would be signalled with a closing price below this support line at $30.0.

AUSTRALIAN VOLATILITY INDEX: The equities trader’s compass.

The current volatility closing value has moved lower to close below the key 11 level following a spike lower during the week.  Current closing value indicates the XVI volatility level has remained in the Complacement level for Equities as the market prices in lower PUT option insurance or forwards pricing to cover portfolio risk. 

With the indicator value moving lower Mid-week, the forward pricing (Volatility) of PUT options (insurance) is decreasing, this is observed against a Bullish advance in the market, indicating market participants believe equity price movements may turn higher in the longer term. (Trump inauguration)

For continued support of equities, the XVI should remain subdued below the “13” level.

The cost of 3month forward PUT options is moving lower from recent higher levels over 13.

The XVI is the difference between 3-month forward pricing of ETO Options against current month. As markets anticipate events, the forward priced option volatility changes, hence this longer dated forward price change, or “skew” in pricing is measured in this XVI. The XVI value works as an inverse correlation to the underlying market.