XJO WEEKLY
Price structure: Consolidation
Price consolidation remains the most likely outcome in the coming weeks, as the Index sets resistance at 7910 and support around the (ATH) all-time high level of 7632. Last week, the index set a “spinning” candle with a large range from high to low, further indicating the developing indecision between the buyers and sellers. This is not a Bearish setup, and longer-term holders should wait for direction.
Indicator: Relative Strength 14 – Slowing momentum
Relative Strength has turned sideways to lower as part of the current consolidation. Only further movements towards the 70 level will remain a bullish signal for further price gains. Last week, the RSI value again moved lower while remaining above the 50 level in line with the current price move. However, during price consolidation, the RSI naturally moves to the neutral 50 level. Should the RSI reading move below the 50 level, the strong indication is for negative momentum to develop.
Comments last week: The index’s failure to trade over the 7910 level clearly shows the developing resistance level and reading channel. The Inside period (IPd) down close is a Bullish outcome overall, indicating real selling failed to break the previous week’s low point. Going forward, the observation may develop that to a “lower high” point with a further retest towards 7632 points, as was observed six weeks prior.
XJO DAILY
Price structure: Pivot reversal
The Daily view of the Index shows the market moving to “Technical levels” to find Support and Resistance, this remains a stable market for traders. No daily “trend” is identified; however, the support level 7580 is increasingly becoming the level to be held in the coming trading week. Last Frida, was set a bullish pivot point with the close at the 7700 support/resistance level. This is a bullish setup for a further move higher in the coming days to retest the 7910 level. A close below 7580 would indicate Sellers have taken control of the price and would set a Bearish tone for further declines.
Indicator: Relative Strength 14
The Relative Strength Indicator (14) turned lower into Friday’s close. The overall decline in momentum results from the larger price consolidation developing, which is reflected in the Relative Strength moving to a neutral reading (50). This is the level where traders would be looking for a further sell signal below the 50 level, but with the current readings at the “50” level now, the potential for a reversal remains high.
Comments from last week: The 7800-level referred to last week has failed to provide support, with last Friday setting an impulsive move lower towards 7700. The lower Volume study indicates this was done at a “low volume”. Low volume declines are a bullish signal; this week, look for the 7700 level to provide support. Should the Index move below this level, the next support in this consolidation zone is 7472. This consolidation area has a 5% range from high to low, and as the market is within a Primary UP trend, this range can only be viewed as Bullish for a breakout higher.
S&P 500 WEEKLY: Resistance breakout
The S&P500 set a new high two weeks ago, and this week, it set a strong lower shadow (wick) candle, with the close of the week above the 5270 level at 5277. As with last week, Buyers and Sellers are unable to set market direction. This can be a bearish setup, with the potential for short-term profit takers to enter the market. Traders would look for a close below the Trendline and the 4920 level to confirm a major top is in place. See the RSI note below.
Indicator: Relative Strength Indicator 14
Relative Strength has turned sideways to lower as the momentum indicator slows and remains below the 70 level but above the important 50 level. As discussed last week, the RSI has developed a bearish divergence signal with a movement lower towards the key 50 level, as any Index price consolidation towards the 4920-4818 level may re-assert a further bearish RSI signal with the indicator turning lower towards the 50 level and towards the 30 level.
Comments from last week: Two weeks ago, the index moved to an all-time high and set a Fake Out (short-term bearish), with last week setting another new high but closing at the opening range (Doji) and, importantly, over the 5270 level. Buyers and Sellers unable to set market direction. This can be a bearish setup with the potential for short-term profit takers to enter the market. Traders would look for a close below the 4920 level to confirm a major top is in place.
SPX DAILY
Price structure: Hammer reversal.
The OPd discussed last week has followed a lower trend in last week’s trading movements. The “Gap open” signal has now played out with the “Gap” closed and a Hammer reversal candle set at the close last Friday. An immediate follow-through higher is required to set a bullish view. Traders should monitor the index for a break below last Friday’s low of 5191 for a bearish signal to indicate further downside is possible.
Indicator: Relative Strength Indicator 14
Relative Strength Indicator has moved to the 50 level, indicating a loss of bullish momentum, and is currently turning higher while above the 50 level. A continued move higher towards the “70 level would be a bullish signal with the expectation of further gains. Relative strength is a momentum indicator, a swing back below the key 50 level would be a Bearish signal that should not be ignored.
Comments from last week: The “gap open sell” discussed last week has developed into a small consolidation range, with last Thursday setting an Outside range down close (OPd); this is highly indicative of a short-term top developing with 5342 points as the all-time high. In the Daily short-term view, a close below the “Gap” level of 5250 would offer a short-term sell signal. History shows the larger range down close bars offer significant resistance in the near term outlook.
NASDAQ DAILY
Price structure: Bullish Hammer
As with the SPX, the Outside Period (OPd) down close played out last week into lower values below the 18,464 level. Last Friday saw a strong reversal candle set with the close above this important level. Traders would look for a further close above this level as evidence of a strong Bullish reversal. However, a closing price below this level would indicate strong selling, with the 17,790 level remaining as the lower target.
Indicator: Relative Strength 14
Last week saw the momentum indicator turning lower to sideways below the key 70 level. The RSI could now be monitored for a potential further movement lower below the 50 level, indicating a loss of bullish momentum is underway; this may provide some early insight into the overall Primary trend reversal. Relative strength moving higher above the important 70 level shows Bullish momentum returning.
Comments from last week: The Daily level of interest is the 5250 level, which is the lower side of the “Gap open sell signal” window. A further close below this level would confirm a short-term top is in place. The OPd is a signal of exhaustion of the buyers. With the current price action remaining over the March 24 highs, the potential for a more conclusive sell-off has developed.
USD Spot GOLD – DAILY: Major trading range.
The USD Gold price has moved lower from the 3-bar reversal discussed last week. Last Friday’s large range high-to-low candle is also an “outside range,” closing on the low and moving towards the $2288 support level. The USD Gold is clearly developing into a trading range, with resistance showing at $2431 and Support identified at $2288. A breakout either way will be decisive for a strong directional movement. See RSI note.
Indicator: Relative Strength 14
The RSI is turning lower to move below the key 50 level. Relative Strength is a momentum indicator and has turned negative at these levels, indicating that price momentum over the current 14-day lookback period is weakening. Long-term traders should monitor this Daily chart for a fifth major yearly top developing at this $2430.0 level, with further declines in the long term.
Comments from last week: As discussed last week, the $2431 level remains a significant resistance level to cross. The Daily chart shows a move higher last Monday to set a BullTrapp FakeOutt (FO) that has developed into a 3-bar reversal pattern, followed by an immediate sell-down. Gold is now developing a trading range, while support remains at $2280. A breakdown below this level would give a very bearish signal for further declines. The current risk is a Major Top is developing, and further profit-taking will take place. The overall Primary UP trend remains in place until a lower high is set.
AUD Spot GOLD – DAILY: Bearish pivot.
The $AUD XAU price is derived from the $USD Gold price converted into $AUD. Fluctuations in either value will change the $AUD Gold price. Last week, the $USD Gold price declined, and the $AUD marginally strengthened, resulting in a lower AUD Gold price. With declining momentum in the USD Gold price and the potential for the $AUD to strengthen further, the result would play out into a further decline in the AUD Gold price.
Comments from last week: The $AUD XAU price is derived from the $USD Gold price converted into $AUD. Fluctuations in either value will change the $AUD Gold price. With the decline in the $USD Gold price last week, the weakening $AUD could not offset the decline in value. The OPd Outside range down close is a bearish signal for further declines in the coming days.
SILVER Price structure: Trading range
USD Silver has now set to reversal pivot points below the $32.0 level, with last Friday again testing towards the $30.0 level. The early stage of a trading range is developing, with the $30.0 level a key level for the Bullish to hold to maintain momentum towards the upside. During the past week, the price closed at a new high, with immediate selling setting the reverse pivot point. The large range high to low set last Friday is bearish.
Relative Strength 14:
Currently, the Relative strength is turning lower from the 70 levels, indicating a “Sell Divergence” is now in place. Only a continued move higher and over the 70 level would reflect a solid change in the underlying price momentum as the current Primary UP trend becomes an extended move.
Comments from last week: Silver is developing into a new consolidation range above the key $30 level. A further decline below this important level would send a very Bearish signal to short-term holders that a top may be in place. For Silver to remain “Bullish” price should move over the $32.0 range. However, with the current Pivot reversal in place, the $30.0 level will be the focus this week for buyers to hold. Silver is at risk of setting an all-time high with further declines to come in the coming weeks.
AUSTRALIAN VOLATILITY INDEX: The equities traders compass.
The current volatility closing value has moved above the 11 value again following a move lower below this key 11 level. The closing value indicates that the XVI remains within the “Bullish for Equities” level.
With the indicator moving lower early in the week, the forward pricing (Volatility) of PUT options (insurance) was decreasing; this is observed against a flat market, indicating market participants believe equity price movements may turn neutral, as the cost of 3 months (insurance) Put Options was decreasing, suggesting the market is moving towards a bullish outlook.
For continued support of equities, the XVI should remain subdued below the “13” level.
The cost of 3-month forward PUT options is decreasing from recent elevated levels.
The XVI is the difference between the 3-month forward pricing of ETO Options and the 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 correlation to the underlying market.