XJO WEEKLY
Price structure: Retest higher

As anticipation mounts about an interest rate cut in Australia and the coming US presidential inauguration, markets appear to be in a consolidation phase waiting for some further direction.

The XJO Weekly chart shows a retest of the 8385-level taking place, resulting in two opposing hammer bars. This pattern, marked by the distinct shape of the hammer closing near the open of the week, typically signifies a potential reversal in market sentiment. The presence of opposing hammer bars further amplifies the indication of market indecision, as it reflects the ongoing battle between buyers and sellers striving to gain control.

Indicator: Relative Strength 14:  Bullish

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

Comments last week: This Weekly XJO displays a 2nd Inside range, with a high close within the range, this current phase suggests that the market is currently in a state of equilibrium, with buyers and sellers in a stalemate. This pattern is often indicative of a period of indecision in the market. Traders are observing this closely, as a breakout from this inside range higher or lower will signal the next significant price move. The direction of this breakout will be crucial in determining whether the market will continue its bullish trajectory or reverse trend. The current price structure implies that the market is waiting for a catalyst to push it out of this consolidation phase.

XJO DAILY
Price structure: OPd.

The Daily XJO Chart highlights the indecision within the market as Friday sets an Opd range. This Opd pattern, characterized by the closing price being lower than the opening price of the day yet trading higher and lower than last Thursday’s range, this only reflects the ongoing struggle between bullish and bearish forces. The resulting price action signifies a lack of clear direction, with neither the buyers unable to take the market higher nor sellers able to establish dominance. Trading volumes are picking up as the holiday period comes to an end.

Indicator: Relative Strength 14:

The Relative strength Indicator (14) has turned higher into the close last Friday and has moved again to the important 50 level, the overall RSI trend shows slowing momentum. With the move lower below the 50 level, Traders would be looking for further Sell signal should a continued lower price move occur with the RSI closing below the “30” level targeting towards 20. 

Comments from last week: Further confirming the bullish outlook highlighted earlier. This higher low, in conjunction with the bullish pivot point, indicates that the market has found strong support and is likely to resume its upward trajectory. Currently the 8083 level remains a strong support with first resistance shown at 8330 points.

S&P 500 WEEKLY: Support tested.

The S&P 500 has set an Opd range for the week, testing the lower 5853 level of support. This indicates a critical juncture where the market is assessing its next move, whether it will uphold the bullish momentum or face a potential reversal. The interplay of support and resistance levels will be pivotal, especially as traders closely monitor the Relative Strength Index (RSI) for signs of either a continuation of the current price UP trend or a shift towards Bearish sentiment. The upcoming weeks will be crucial in determining the market’s direction, particularly with the impending transition of presidential administration in the US, which adds an additional layer of uncertainty and potential market volatility.

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

The Bearish Divergence observed in the Relative Strength Index (RSI) signals a potential reversal in market sentiment. This occurs when prices continue to rise while the RSI trends lower, indicating weakening momentum despite higher prices. This is often interpreted as a warning of an impending downturn. In the current analysis, we see the RSI showing a longer-term Bearish Divergence confirming the falling price, suggesting caution. If the RSI crosses below the key threshold of 50, it may confirm a bearish outlook.

Comments from last week:  The S&P 500 has maintained its critical support level of 5853 points, reinforcing the bullish sentiment for the time being. However, traders should stay vigilant as the market presents mixed signals. The interplay of support and resistance will shape the early weeks of 2025. Close attention to these levels will be key to navigating the market’s next moves going into the change of President in the US. The Bearish Divergence observed in the Relative Strength Index (RSI) signals a potential reversal in market sentiment.

SPX DAILY Price Structure: New low

The S&P 500 has set a new closing low, reinforcing the Bearish sentiment observed in recent market movements from the retest of the 6020-level leading to a failed swing high over this key level. The current Fake out low (FO) has closed below the 5829 point low set on the 2nd of January 2025. The Daily trend is down against the prevailing UP trend in the Weekly chart. Given the widening consolidation pattern the S&P may be setting a long term top in place.

Indicator: Relative strength 14. Bullish Divergence

The Relative Strength Indicator (RSI) continues to show a bearish divergence, suggesting that with the lower prices, momentum remains weak. This divergence warrants caution among traders, as it also indicates the potential for continued downward pressure based on the price chart failing at the 6020 level. If the RSI drops below the pivotal 30 level, it would likely confirm a bearish outlook, leading to further downside targets.

Comments from last week: The current daily consolidation reflects a market that is consolidating, with traders weighing the Bullish and Bearish signals presented. The interplay between the relative strength index (RSI) and the price movements is critical at this juncture. As the RSI hovers around the 50 level and showing a Bullish divergence it serves as a pivotal point that will reflect future market movements. A sustained move above this threshold may invigorate bullish sentiment, while a decisive reversal below it could lead to a very Bearish outlook.

Attention must be paid to the rising wedge, which can denote significant reversals. The market’s ability to maintain support at key levels, such as 5853 points, is crucial for sustaining the bullish narrative in the coming week.

NASDAQ (100) DAILY Price structure: Developing channel

The Nasdaq continues to consolidate lower into a trading channel, characterized by a series of lower highs and lower lows. This downward movement suggests persistent bearish pressure, with traders closely watching for any signs of continuation. The channel’s boundaries offer critical support and resistance levels, which will be pivotal in determining future price action. As the market navigates this channel, the interplay between price structure and relative strength will be crucial following the “Gap open sell signal being completed. The emergence of the rising wedge pattern within this context adds another layer of complexity, signalling potential reversals that could disrupt the current Primary UP trend.

Indicator: Relative Strength 14: Bearish turn

Relative strength has now turned sideways to lower while moving back below the 50 level, indicating weakening momentum as price also moves lower. The rising RSI over the 50 value can provide some early insight for Major Primary UP trend. A further move lower towards the 30 level would send a very Bearish signal not to be ignored.

Comments from last week: As we observe the daily pivot point, following the Fake out low point showing an immediate reversal.  It is essential to note how the RSI trends around the critical 50 level, potentially dictating future market movements. A rising wedge pattern has also emerged, often denoting possible reversals. The market’s ability to sustain support at crucial levels, such as the 21,340 points, will be pivotal in maintaining a bullish narrative. This week traders should look for a close over this critical level, before a retest of the 22,000-point level.

USD Spot GOLD – DAILY: Breakout

The USD Gold price has reacted from the lower support line and staged a solid breakout, indicating a potential shift in market sentiment. This breakout towards the previous resistance level underscores the strength of the underlying bullish momentum, which may pave the way for further upward movement in the near term to test towards the $2717.0 level. As the price continues to rise, traders will be keenly observing the RSI for any signs of overbought conditions or potential reversals. Should the RSI maintain its position above the pivotal 50 level, it would bolster the Bullish outlook and suggest that the upward trend is likely to persist.

Indicator: Relative Strength 14: Swing Lower continues.

The RSI has turned sideways and higher to finish above the 50 level. This is a bullish signal, and it remains a strong observation price is resuming upward momentum. Further advances in the coming weeks will remain a very Bullish signal.  Price declines from this level will see the RSI move lower towards the 50 level. This is the message from this momentum indicator, consolidation can signal changing of directional momentum.

Comments from last week: Gold has posted a second trendline support point, indicating that the precious metal is holding firm against downward pressures. This support level is proving to be a critical juncture for market participants, as it not only underscores the resilience of gold but also sets the stage for potential bullish reversals in this pennant formation with four low points. Traders are closely monitoring this development, as a sustained defence of this trendline could catalyse a renewed upward momentum.

AUD GOLD – DAILY: Primary UP Trend.

The weekly chart of AUD Gold has further developed into a major UP trend, solidifying its bullish outlook. This development is characterized by a series of higher highs and higher lows, reflecting robust buying interest and sustained upward momentum. The price action indicates a strong defence of key support levels, which has reinforced confidence in the continuation of the upward trend.

As the AUD Gold price advances, the next significant resistance level to watch is around the A$4,500 mark. 

In summary, the unfolding Primary UP trend in AUD Gold is underscored by strong technical picture, pointing to a promising outlook for further appreciation in the coming weeks.

Australian based Gold producers should be researched for a potential trade.

Indicator:  Relative Strength 14:  

The Relative Strength Index (RSI) remains a crucial indicator, showing a consistent move above the pivotal 50 level. This persistence above the 50 midline suggests that the bullish momentum is not only intact but likely to strengthen. Traders are advised to watch for any minor pullbacks as potential buying opportunities within this broader uptrend, as the overall market sentiment remains strongly in favour of continued gains.

SILVER Price structure: Weak advance

Unlike Gold, Silver has made a weak advance above the $29.60 level. It should be acknowledged Silver remains in a Downtrend with only recent price activity setting a potential based for a reversal of trend. The $29.60 now provides a key support level for traders to monitor this week.

Relative Strength 14:

Relative strength is now moving in line with the underlying reversal price structure. The current reading has moved above the key 50 level, showing increasing Bullish momentum.  This indicator should be monitored for a BUY divergence signal, completed with a continuing closing price above $29.60 level.

Comments from last week: Silver has set a second retest of the $28.80 support level with a bullish pivot point in place. This double low development is crucial as it suggests a potential shift in momentum. If the support at $28.80 holds, it could mark the beginning of a bullish reversal, encouraging Bullish traders to adopt a more optimistic outlook. The ability to maintain this level will be instrumental in determining the future trajectory of silver prices out of the current Downtrend.

AUSTRALIAN VOLATILITY INDEX: The equities trader’s compass.

The current volatility closing value has moved higher to close above the key 11 level following a large spike higher during the week.  Current closing value indicates the XVI volatility level in the Bullish level for Equities as the market volatility begins to see higher priced PUT option insurance to cover portfolio risk. 

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

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.