XJO WEEKLY
Price structure: 2nd Outside range.

Last the discussed OPd has failed to follow through lower, no close below the 7910 level occurred, this being the message from the market. Again, last week the 7910 level was retested followed by a rally to close again above the 8083 initial resistance level of 9 weeks ago. The expectation of further gains could be expected as the underlying Primary UP trend reasserts itself.

Indicator: Relative Strength 14 – Bullish 

Relative Strength has turned higher in line with the long-range price action for the week and importantly remains above the key 50 level from the bullish momentum within the previous 14 bars (Weeks). Only further movements higher towards the 70 level can set a continuing bullish signal for further higher price movements. Should the RSI reading move below the 50 level, the strong indication is for negative momentum to develop leading to Trend failure and further consolidation.

Comments last week: The XJO Weekly chart has set an “outside period” with a long-range bar high to low. Using the Haguro method this type of bar (#9) with a lower wick exposed is identified as a turning point bar when found in a high price area following the August low point. When this is a long line, selling is indicated when trading in the direction of the underlying movement and TREND. This line indicates an end to the current movement, confirmation will show as a close below the 7910 level.

XJO DAILY
Price structure: Developing Reverse point wave.

The Reverse point wave continues to develop, with the expectation of further gains to set a higher high, to achieve this a close over the Friday high of 8143 points. The Fake Out (FO) set on Friday may offer some consolidation in price before a further higher close towards 8150. The message in the price action is the impulsive move set 2 weeks ago has failed to follow through lower and last week completed a full recovery to close towards the 8100 level.

Indicator: Relative Strength 14: Bullish

The Relative Strength Indicator (14) has turned moderately higher into the close last Friday while moving above the key 50 level the outlook is gaining momentum to move higher. Traders would be looking for further BUY momentum should a continued price move occur only with the RSI continuing to rise while over the “50” level targeting 70.

Comments from last week: The reverse point wave structure discussed last week has developed further, setting a marginally higher point before the impulsive move lower. Key support at 7910 has again been tested with an immediate move higher last Thursday and Friday. The short-range set against the “impulsive” move lower sets up a Bearish Flag pattern for further declines. A volatility test to the Reverse point wave low at 7632 points would not be out of the question.

S&P 500 WEEKLY: Bullish Engulfing range.

The S&P has set a Bullish engulfing range last week to cover the double top rejection Candle set 2 weeks ago, here is the message from the market. This immediate Bullish bar following rejection may see the Index breakout to new highs and negate to Double Top pattern.  A further Weekly close over the 5670 level would confirm this outlook. The underlying Primary Trend remains UP.

Indicator: Relative Strength Indicator 14. Divergence

Relative Strength has turned higher as strong price momentum is resuming. The RSI (momentum) value has remained over the key 50 level during this Primary UP trend. It should be noted the RSI is still declining from the divergence Top signal, this is Bearish. A turn lower towards the 50 with any Index price movement towards the 5400-point level and below will re-assert a full bearish RSI signal. The current position of the Relative strength indicator has a second Bearish divergence signal confirmed.

Comments from last week: Last week the reversal signal has occurred and confirmed a Double Top is now in place as the Index fails to take out the 5670-level discussed last week. The measured move target is the long term Trendline. With momentum declining sharply (see RSI note), a close below the 5100 level initiates a bearish signal for further declines over time. The current prime trendline target is also the November 2023 breakout level of 4545 points. Indices are considered forward looking at economic conditions, some of which are indicating a US recession.

PX DAILY Price Structure: Bullish retest underway.

Wednesday last week the Index staged an important retest towards the impulsive low point at 5402 points, the high close in the range followed through higher into Friday’s close also providing a clear reversal signal. The major 5670 resistance level is now in play. Should a further Daily close above this level occur the Double Top pattern will be negated as the Primary trend resumes.

Indicator: Relative Strength Indicator 14

Relative Strength Indicator has risen sharply above the 50 level into last Friday’s close, traders should consider a further advance above the 50 level as a Bullish momentum signal. Only with a continued move higher above the “50” level the expectation of further advances remains. Relative strength is a momentum indicator, only a swing back higher towards the key 70 level would set a very strong Bullish signal that should not be ignored.

Comments from last week: Failure of the potential developing Bullish Flag has closed the first “Gap” at 5400 points the next lower “Gap” is shown at the 5100 level coinciding with the 200 day moving average value and the approximate value at point “c” of the initial decline during July. Large range days will give way to consolidation periods as seen during last Wednesday / Thursday however without a clear reversal signal the lower targets remain in place.

NASDAQ (100) DAILY Price structure:  Bullish Pivot

The Nasdaq has begun to reaffirm the Primary UP Trend with a new higher low (HL) set at the 18,464 level. An important development with last Wednesday also retesting this level with the close setting a Bullish pivot point. With a retest of the 20,000 level now underway a breakout higher over this important level will target the July high. Volatility within this Tech stocks driven Index remains very high, price failure below the 18,464 level would provide a strong bearish sell signal.

Indicator: Relative Strength 14

As the Relative Strength has now moved above the key 50 level again, mirroring the changing price direction / momentum. Relative Strength rising and remaining above the important 50 level is required before a Bullish momentum signal can be declared. This can provide some early insight for Major Primary UP trend continuation.


Comments from last week:   Failure of the developing bullish flag with a solid close below the 18,464 level, the Nasdaq is now taking out levels set during February, March and April this year as the lower high is confirmed. Placing this year’s buyers into a losing position. This type of decline will gather further momentum should the key level of 17,800 not provide a technical price support level for a reversal. A break and close below the 200-day moving average would be a significant development in the early stages of a developing Bear market.

USD Spot GOLD – DAILY: Bullish breakout

The $2570 level discussed back in July has finally been met following the multi week consolidation above the $2483.0 level. History shows USD Gold can consolidate for many weeks before resuming the Primary move higher. Without further immediate price gains above $2570, USD Gold may consolidate further at this level.

Indicator: Relative Strength 14: Bullish

The RSI has turned higher and remains above the 50 level. Relative strength is now moving towards the 70-level indicating very strong underlying momentum in play. Long term traders should continue to monitor this Daily chart for a 5th major yearly top developing at this level with further declines in the long term. The current close over the $2570 level has now negated this view.

Comments from last week: USD Gold is developing a strong support level at $2483.0 with a further of this level during the past week. Strong resistance remains at $2531.60 with last Friday testing both levels during the session. The price target of $2570 remains in place in the current Primary UP trend. As the price of USD Gold continues to close above $2483.0 the prospect of further gains remains the better trade.

AUD Gold Price structure: New Primary breakout.

The Australian Dollar Gold chart (Weekly) shows an important breakout above the $3800 resistance level, resuming the Primary UP Trend. Australian Gold producers may find momentum buying as the AUD Gold price moves higher. To keep momentum the USD Gold price must continue to increase and or the $AUD decline from the current $0.67c level. Australian Gold producers (not explorers) will directly benefit from this momentum breakout. GOR, EVN, NST or the ETF- GDX

Relative Strength 14: 

Relative Strength (momentum) has swung higher and moved over the 70 level indicating very strong momentum.

SILVER Price structure: New Primary move.

Last week confirmed a new Primary UP Trend movement as the metal set a new higher low (HL) and traded over the August Lower high (LH) at $30.03. With very strong ranges low to high the metal looks set to retest the all-time high of $32.50 (ATH). Silver remains within a large consolidation zone above $27.0 and below $32.50. Currently silver remains in a very Technical structure as historic levels from 2021-22 are retested as support and resistance.

Relative Strength 14:

Over the past 3 months the Relative Strength has steadily declined and has again moved below the 50-level moving towards the 30 level, indicating a sell signal. Last week’s commentary included this, “The RSI should be monitored for a continued move below the 50-level indicating MOMENTUM FAILURE”.  Last Friday’s close saw the indicator turn lower, with a cross below this key level. The current declining momentum sets the Trendline target of $27.0 until a reversal pattern is set.

Comments from last week:  Silver has again set a bearish pivot point with further declines expected to retest the $27.00 level. Silver remains within a Technical Primary DOWN Trend following the lower high set 2 weeks ago. For a technical reversal to apply USD Silver must trade back over the $30.0 level to set a new high over the recent August high. Currently at best USD Silver remains within a large consolidation zone with resistance at $32.50 and support shown at $27.0. A break on either side would be a significant development.

AUSTRALIAN VOLATILITY INDEX: The equities trader’s compass.

The current volatility closing value has moved to close back below the key 13 level following a spike higher during the past week.  Current closing value indicates the XVI volatility level has moved back to the Bullish level for Equities level. Markets are starting to price in future downside hedging protection. 

With the indicator value moving higher, the forward pricing (Volatility) of PUT options (insurance) is increasing, this is observed against a Bullish reversal in the market indicating market participants believe equity price movements may turn lower in the longer term. 

For continued support of equities, the XVI should remain subdued below the “13” level.

The cost of 3 month forward PUT options is moving higher from recent lower levels.

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.