XJO WEEKLY
Price structure: Consolidation

Although the Index remains within a wide consolidation zone, last week, the market moved higher to close over the previous week’s high point and finally set a pivot point reversal following the prior week’s retest towards the 7632 level. This is a very Bullish setup, with a breakout above the 7910 level possible. The underlying primary trend remains UP.

Indicator: Relative Strength 14 – Strengthening momentum

Relative strength has turned higher as part of the current consolidation. Only further movements towards the 70 level will remain a bullish signal for further price gains. However, during price consolidation, the RSI naturally moves to the neutral 50 level. Should the RSI reading move below the 50 level, this is a strong indication of negative momentum developing.

Comments last week: 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.

XJO DAILY
Price structure: Primary movements.

Follow-through from the Daily pivot point discussed last week shows minimal overlap on the daily trading ranges, with last Friday closing towards the high of the day. Traders would look for a breakout across the 7910 level to set a target of 8000 points. Several strong daily ranges in the past week indicate buyers control price movements. The 7910 level remains the first resistance target, this is the level sellers would be looking to take profit.

Indicator: Relative Strength 14

The Relative Strength Indicator (14) turned higher into Friday’s close; the overall strength in momentum results from the larger price movements and is reflected in the Relative Strength moving to above a neutral reading (50). This is the level where traders would be looking for a further buy signal above the 50 level, but with the current readings at the “50” level now, the potential for a reversal remains a concern.

Comments from last week: 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, support level 7580 is increasingly becoming the level to hold in the coming trading week. Last Friday, we set a bullish pivot point with the close at the 7700 support/resistance level. This is a bullish setup for a further move to retest the 7910 level in the coming days. A close below 7580 would indicate Sellers have taken control of the price and would set a Bearish tone for further declines.

S&P 500 WEEKLY: Resistance breakout

The further breakout of the S&P500 over the 5270 level has again not been decisive, with a lower shadow testing towards the short Trendline while overlapping the previous weeks’ price range. This remains a bearish setup with the potential to close below the 5720 level as the first indication of Trend failure. To remain Bullish, the price action should set a strong advance from this level towards the 5500 level to indicate that the buyer remains in control.

Indicator: Relative Strength Indicator 14

Relative Strength has turned sideways to higher as the momentum indicator improves but remains below the 70 level but, importantly, above the 50 level. As discussed last week, the RSI has developed a bearish divergence signal with a movement setting a lower point on a higher market last week. A further turn towards the key 50 level, with 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 the 30 level. 

Comments from last week:  The S&P500 set a new high 2 weeks ago, with this week setting 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 cannot 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.

SPX DAILY
Price structure: Fake Out Bull trap.

The Daily price movement remains in consolidation at the Fake Out point. The current closing highs remain unconvincing of further gains as the price movement remains extended above the 200-day moving average. The overall Primary trend remains UP. Traders should monitor the Index for a closing price below the 5300 level as the first reversal signal.

Indicator: Relative Strength Indicator 14

Relative Strength Indicator has moved towards the 70-level, indicating an improvement in bullish momentum, and is currently turning lower (Friday) 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 OPd discussed last week has followed through lower 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.

NASDAQ DAILY
Price structure: Consolidation

Last Wednesday the Nasdaq index gapped open to a new high above the previous OPd high, both Thursday and Friday did not follow through with only short-range days, discounting the view of a strong bullish outcome. Further consolidation may develop at this level. The underlying Primary trend remains UP.
The short-term downside risk remains, should the recent price “Gap” be filled on a reversal bar, the result may develop into a selling event towards the 18,464 level.

Indicator: Relative Strength 14

Last week saw the momentum indicator 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: As with the SPX, the Outside period (OPd) down close has played out into lower values below the 18,464 level last week. 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 the lower target.

USD Spot GOLD – DAILY: Major trading range.

Gold has remained within the Trading range between $2288.0 and resistance shown at $2431. Last Friday, $USD Gold again set a very strong “outside range” (OPd) to test the lower level of the range. Rice now risks following through lower to the $2222.0 support level. Three major high points are now evident, April, May, and now June show key reversal points in this consolidation, indicating a Major top is now in place. Immediate price support is required at this level before any further Bullish moves can be made.

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:  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.  

AUD Spot GOLD – DAILY: Pennant.

The decline in the $AUD value of Gold has been offset by the decline in the $AUD to $0.6582c. The $AUD Gold price is now consolidating into a Pennant pattern above $3,450. A further rise in the USD price of Gold or decline in the AUD is required to hold the current value of Gold in AUD terms.

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. Last week saw the $USD Gold price decline and the $AUD marginally strengthen, 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.

SILVER Price structure: New low

Last week, the Bearish Divergence was identified as the highest risk to the underlying price of Silver. That divergence has now played out, with the price of Silver moving below a significant support level of $30.0. The next support level is shown at $28.80. This will be the key level to hold this week.

Relative Strength 14:

Currently the Relative Strength is turning lower from the 50 level, indicating a “Sell Divergence” is now playing out into a full sell signal. Only a continued move higher and over the 50 level would reflect a solid change in the underlying price momentum as the Primary UP trend rolls over to enter a downtrend.

Comments from last week: USD Silver has now set two 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, 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.

AUSTRALIAN VOLATILITY INDEX: The equities traders compass.

The current volatility closing value has moved to close below the 11 value again, following a further move below this key 11 level. The closing value indicates the XVI remains within the “Complacent Level 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 month (insurance) Put Options were decreasing, suggesting the market is moving towards a bullish outlook.

The XVI should remain subdued below the “13” level for continued support of equities.

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.