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Index and Commodities Trading Week Beginning 06/05/2024

Index and Commodities Trading Week Beginning 06/05/2024, FP Markets

XJO WEEKLY
Price structure: Consolidation

Sellers continue to maintain strength over the price action with last week’s “short range” higher close bar. The 7632 level now provides resistance following the impulsive down move 3 weeks ago. The Index is now developing a trading range between the spike lows at 7500 points and resistance at 7900 points. The primary trend remains UP, with the index entering into a consolidating range movement, as the current price action remains within the impulsive range of 3 weeks ago.

Indicator: Relative Strength 14: Bearish Signal

Relative Strength has turned sideways as part of the overall directional move. Only further movements towards the 70 level will remain a bullish signal for further gains. Last week, the RSI value moved higher while above the 50 level, in line with the current price move. However, a new indicator high is required over the late Q4-2023 high point to set a bullish tone. Should the RSI reading move below the 50 level, the strong indication is for the current bearish momentum to continue.

Index and Commodities Trading Week Beginning 06/05/2024, FP Markets
Comments last week: The brief rally early in the shortened 4-day week met with resistance at the 7700 level ( see Daily below). Currently,, the Weekly closing price is almost equal to the open price, and the bar is an “Inside range”. The current weekly bar is also the 2nd highest close below the 7632 level, indicating sellers remain in control. Ultimately, a retest of the 7200 level is possible. The Primary trend remains UP with the Index entering into a corrective movement. 

XJO DAILY
Price structure: Bearish Pennant

In the daily time frame, internal support is developing at 7580, which will be the short-term level to be held in the coming week. The consolidation, now developing into a continuation pennant, has the potential to break lower to retest the 7472 support level. With strength in the financials last week providing support, a higher follow-through can only be achieved with a broad-based rally across all sectors, particularly the materials sector, which holds BHP and RIO.

 

Indicator: Relative Strength 14

The Relative Strength Indicator (14) turned higher into the close on Friday. The overall decline in momentum is a result of the larger price decline developing. This is the level where traders would be looking for a further sell signal, with the current readings below the “50” level now potentially heading to the “30” level,, where early buyers would look for a divergence buy signal.

Index and Commodities Trading Week Beginning 06/05/2024, FP Markets
Comments from last week: With 4 trading days in the week, the rejection at the 7700 level and follow-through to close below the 7580 level is significantly bearish. Consider a further retest lower than the 7472, which is immediately possible. The Daily chart is now trending down with strong range movements to the downside. Further potential remains for a retest of the 200-day moving average at 7350. The index is heavily weighted, with the 4 banking organisations currently providing bearish market sentiment based on the potential for an interest rate rise before any future rate reductions take place.

 

S&P 500 WEEKLY: Reversal range (Bearish)

Last week, the index posted a lower shadow range with a high close. This is regarded as bearish should the index confirm a close below the 5000-point level this week. Also noted is that the current price movements remain within the strong range of three weeks ago. Key support remains at 4920. A close below this level will show a lower high being set and offer the potential for a further decline.

Indicator: Relative Strength Indicator 14

Relative strength has turned higher as the momentum indicator moves below the 70 level but above the important 50 level. In the coming week, traders would monitor the RSI for a bearish signal with a movement below the key 50 level, as any Index price consolidation towards the 4818 level may re-assert a bearish RSI signal with the indicator turning lower towards the 50 level and towards the 30 level. 

Index and Commodities Trading Week Beginning 06/05/2024, FP Markets
Comments from last week: Following the “pivot point” reversal and follow through to retest the 4920 level, an “inside up close” bar was presented last week. This is not a bullish signal until a close over the 5115 high of the bar is recorded. The lower 4920 price is now the key level required to hold this week. The underlying Primary trend remains UP. Traders would look for a further close below the 4818 level to keep a bearish view of this market. The current movement remains a retracement within a Primary UP trend.

SPX DAILY
Price structure: Bearish Flag

The “Pivot reversal” discussed last week has failed to follow through, with further mixed price movements showing last week that the structure is developing into a bearish flag pattern. Short-range bars indicate neither the buyers nor sellers have price control. To remain bullish, a close over the recent 5264 high point is required; until then, the index is considered to be retesting the highs.

Indicator: Relative Strength Indicator 14

The Relative Strength Indicator had moved strongly below the 50 level, indicating bearish momentum, and is currently moving higher to cross the 50 level. A continued close over the 50 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.

Index and Commodities Trading Week Beginning 06/05/2024, FP Markets

Comments from last week: A bullish pivot reversal is underway that may resolve into a secondary movement against the recent decline from the 5240-point high area required to close the February bullish gap area. Bearish trading conditions will be confirmed with a Daily close below the 4970 level. The current Daily price trend is down. Failure of the current rally will be signalled with a close below the 5000-point level and the potential for a retest of the 200-day moving average.

 

NASDAQ DAILY
Price structure: Further consolidation

The Nasdaq moved back into the distribution-consolidation area above the 17,790 level on last Friday’s gap-up move. With the close over the 17,790 level, the potential remains for a further retest towards the 18,464 high level. This is currently not a bullish breakout higher, but a retest of the highs is underway. Close inspection of the daily bars shows the expanded ranges occur on down-close bars, indicating selling pressure. A breakout over the 18,464 high with an expanded range would offer a very bullish signal, and caution would be used in this consolidation until then.

Indicator: Relative Strength 14

Last week saw a sharp reversal of momentum, with the momentum indicator now turning higher over the key 50 level. The RSI could now be monitored for a further movement higher above the 50 levels, indicating a stronger bullish momentum move is underway; this may provide some early insight into the overall Primary trend continuation. Failure of the Relative strength with another move below this 50 level, shows momentum to the downside.

Index and Commodities Trading Week Beginning 06/05/2024, FP Markets
Comments from last week: Two weeks prior, the Nasdaq broke a significant support level at 17,790 to trade into the “Gap” at the 17,000 point level. The current rally from the Bullish Pivot point set last Tuesday has the Index retesting the breakdown level. Traders would look for a further close over this key level as a bullish signal for continuation higher. The potential for a further decline also remains should the sellers step in and lower the price back below the key 17,000 point level.

 

USD Spot GOLD – DAILY: Continuing Rejection

The bearish flag discussed last week has followed through to set lower prices; a retest of the $2222.0 level remains a strong possible outcome.  The development of a, b, and c patterns (bullish) requires the “c” leg to extend lower to confirm the setup, and the potential retest of $2222.0 would satisfy that requirement. The underlying Primary trend remains UP. Consolidation is an important development within trends; however, statistics show that after 9 weeks of advances in gold, the PM often declines into long periods of consolidation. The February – March period is also a seasonal window for Gold buying in the sub-continent.

Indicator: Relative Strength 14

The RSI is turning lower from above the key 70 level set in late March with the price reversal. Currently, the bear flag development has the indicator moving sideways above the important 50 level. A negative momentum signal will occur should the RSI move below the 50 level. Long-term traders should monitor this daily chart for a fifth major yearly top developing at this $2400.0 level, with further declines in the long term.

Index and Commodities Trading Week Beginning 06/05/2024, FP Markets

Comments from last week: The impulsive decline from the highs below the $2431.3 level indicates some early profit taking. Currently, a Bear flag is forming on the trendline; a further breakdown for this level will potentially see the $2222.0 level tested. The underlying primary trend remains UP, and consolidation is an important development within trends. However, statistics show that after 9 weeks of advances in Gold, the PM often declines into long periods of consolidation. February is also a seasonal window for gold buying in the subcontinent.

 

AUD Spot GOLD – DAILY: Reversal confirmed.

The continuing decline in the USD price of Gold coupled with the small appreciation in the $AUD has the $AUD Gold price declining to $3476.58 at the close to show continuation from the Pivot point reversal. Sentiment within the Gold sector stocks with production underway may soften and see continued profit-taking following the recent strong rally.

Index and Commodities Trading Week Beginning 06/05/2024, FP Markets

Comments from last week: The decline in the USD price of Gold coupled with the small appreciation in the $AUD has caused the $AUD Gold price to decline to $3576.58 at the close to set a Pivot point reversal. Sentiment within the Gold sector stocks that have production underway may soften and see profit-taking following the recent and very strong rally.

SILVER
Price structure: Further rejection

The Bearish flag discussed last week has followed through with lower prices; the current 3-day consolidation at the $26.20 support/resistance level can move lower to retest the $24.60 level in this overall corrective move. To regain a bullish view, Silver would have to trade back to the $27.0–$27.50 level. The Daily trend is down, with the longer-term Weekly trend remaining in a well-defined Bullish UP trend.

Relative Strength 14:

Current Relative Strength has turned lower from above the 50 level, indicating momentum has turned Bearish. Should the RSI continue lower from this Sell signal below the key 50 level, further downward momentum would be expected. Only a continued move higher and over the 50 level would reflect a solid change in the underlying price momentum and should alert to a potential resumption of the Primary Trend.

Index and Commodities Trading Week Beginning 06/05/2024, FP Markets
Comments from last week:   As seen in the Gold price, Silver has also failed to exceed the all-time high set during Feb 21’, with an impulsive range set followed by the developing Bear Flag. Traders could expect further consolidation as the flag pattern develops. Should a technical breakdown through the current Trendline occur, the $24.60 breakout level remains the target level. To see a resumption of the Primary UP trend, a daily close over the $28.80 level is required. 

 

AUSTRALIAN VOLATILITY INDEX:  The equities traders compass.

The current volatility closing value has moved to close below the 13 level following a move higher above the 13 level. The closing value indicates the XVI remains within the “Bullish for Equities” level. 

With the indicator moving higher early in the week, the forward pricing (Volatility) of PUT options (insurance) is increasing. This is observed against a flat market, indicating that market participants believe equity price movements may turn bearish. The cost of 3-month (insurance) Put Options was increasing, suggesting the market is moving towards a protect profits mode.

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 against 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.  

Index and Commodities Trading Week Beginning 06/05/2024, FP Markets

  • Index and Commodities Trading Week Beginning 06/05/2024, FP Markets
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