XJO WEEKLY
Price structure: Gravestone

The XJO Weekly chart last week has finished with a Gravestone rejection Candle as new high was traded during the week ultimately leading to selling into the close. As the Index has risen from the 8083-support level to set a high of 8514 the 5% movement remains within the normal trend model and some form of decline is expected. This week 8385 remains as the first level of support, a further Weekly close over this level would set a bullish tone. However, a decline to close below immediate support may lead to the 8083 level being tested. 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 lower in line with the rejection of higher prices, but importantly 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 to or below the 50 level, the strong indication is for negative momentum to develop leading to Trend failure and further declines.

Comments last week: 

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.  

XJO DAILY
Price structure: 4 Spike highs

Last week the discussion centered around the 3-spike pattern leading to a decline in prices. This week the Index set a clear 4th spike high exhaustion move followed by the strong range rejection bar on Friday to close on the low of the day. The expectation would be for a follow through lower into the short trendline level of 8385 to 8330 points. The low volume set last Friday is not consistent with a strong sell signal, some form of consolidation could be expected.

Indicator: Relative Strength 14:

The Relative strength Indicator (14) has turned lower into the close last Friday while remaining above the key 50 level, the outlook shows slowing momentum. With the move lower towards the 50 level, Traders would be looking for further Sell signals should a continued lower price move occur with the RSI remaining closing below the “50” level targeting towards 30.

Comments from last week: 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.

S&P 500 WEEKLY: Bearish Divergence remains.

The Index moving higher towards the upper channel line and having risen from the 5670 level to test the upper channel line, traders would be looking for some form of rejection. Last week’s range is small following the Monday gap open, indicating a measured move as buyers remain cautious at this high level.

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:  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.

SPX DAILY Price Structure: New Gap

The Daily S&P500 price movements remain strained with short range Candles and the last 3 trading days ranging within each other. The current Daily Gap is 6060, with a close below this level, the potential remains for further declines. With the extension above the 200-day moving average growing larger, the developing WEDGE pattern is a Bearish pattern on a break of the 6020 lower support line, currently the lower wedge pattern line remains at 6000 points. 

Indicator: Relative strength 14. 

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 “70” level the expectation of further advances remains. Relative strength is a momentum indicator, only the swing higher over the key 70 level would set a very strong Bullish signal that should not be ignored.

Comments from last week: 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.

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

The Nasdaq Index has set a new Gap open on Wednesday opening the possibility of following Gap down leaving a 2nd Island top. Price momentum remains strong with full range bars setting new highs. This trading week new highs again may be set, but the Index is developing and extended high. As the Index extends further from the 200-day moving average the risk of a short term top remains. To confirm the potential Island, top a further Gap below the 21,340 level is required

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 lower towards the 50 level would send a very Bearish signal not to be ignored.

Comments from last week: 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.

USD Spot GOLD – DAILY: Bearish Flag.

The Bearish Flag discussed last week has broken to the downside but not convincingly with last Friday setting a small spinning top, often a point of indecision. It is important to observe the current price remains within a developing channel above $2570.0 and below $2766.0. This week Gold may see a small price rally back into the flag pattern without giving a directional signal.

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 is losing upward momentum. Further declines in the coming weeks remains a very bearish signal.  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: Strong rejection at the $2717 resistance level setting a lower high in the Daily chart. The last 4 trading days now show as 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.

AUD Gold Price structure: Weak $AUD

The current decline in the $AUD has equated to a higher AUD Gold price. The developing Pennant is a continuation pattern. The potential for the AUD Gold price to test the recent highs over $4300 remains while the chart continues the underlying Primary UP Trend.

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

Relative Strength 14: 

Relative strength (momentum) has moved higher towards the 70-level indicating strengthening 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: 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.

SILVER Price structure: Bearish consolidation.

The current price level for Silver remains equal to the levels of last May 2024. From the $35.0 high price decline back to the Trendline, Silver has only consolidated below the $31.50 level. The current ascending pattern may see a break in price to the lower side of the Trendline, confirmed with a close below $30.67. The current OPd candle set last Friday is a bearish signal for further declines.

Relative Strength 14:

Relative strength is now moving in line with the underlying price structure. The current reading remains below the key 50 level, showing increasing Bearish momentum.  This indicator should be monitored for a move further below the 50 level as an indication of Bullish momentum failure. 

Comments from last week: 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.

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.