XJO WEEKLY
Price structure: Retest lower

The  Index is moving between to key levels of 8083 operating as Support and 8385 as Resistance. The current risk is a breakdown of the Index through support, at the 8083 level. Should this support fail, it would indicate a potential shift in market sentiment, possibly leading to further declines and a challenge to the prevailing uptrend that has characterized the past year. Traders and investors will be closely watching for any signs of weakness, which could trigger a wave of selling pressure and push the Index below this critical support level.

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 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: 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.

XJO DAILY
Price structure: Resistance.

The Daily view of the Index more clearly highlights the importance of the 8330 level as resistance has developed at this level late last year. This level has acted as a significant barrier to upward price movements, with several attempts to breach it being met with strong selling pressure as defined in the November-December period last year. This persistent resistance has created a critical point of focus for traders and investors alike, as any successful break above 8330 could signal a renewed Bullish phase and potential for higher price targets towards the 8500 level. Failure to overcome this resistance could reinforce the Bearish outlook and lead to further testing of lower support levels.

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 signals should a continued lower price move occur with the RSI closing below the “30” level targeting 20. 

Comments from last week: 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.

S&P 500 WEEKLY: Bullish Engulfing.

Support along the 5853 level continues to build, reflecting a critical area where buyers are stepping in to defend this price point. This level has been tested multiple times, and each retest has seen a resurgence in buying activity, suggesting its importance as a key support zone. The market’s ability to maintain above this level could signal the potential for a bullish reversal, especially if accompanied by increasing volumes and positive momentum indicators.

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. 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 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.

SPX DAILY Price Structure: New low

Overall the market remains cautious as the new US presidential cycle begins this week.

The S&P 500 has shown critical support and resistance levels with 5900 points acting as support and 6020 points serving as resistance. These levels are vital for traders to watch, as the market’s ability to breach these thresholds could indicate the next directional move. A break above 6020 could signal renewed bullish momentum, while a failure to hold 5900 could lead to further declines.

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 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.

NASDAQ (100) DAILY Price structure: Developing channel

The downward sloping price channel continues to develop within the Nasdaq, characterized by lower highs and lower lows. This pattern underscores the persistent bearish pressure, suggesting that traders should remain cautious. 

As the Nasdaq navigates this downtrend, the interplay between price structure and relative strength will be crucial. The new “Gap open sell signal” occurred last Friday, signalling further potential weakness. Additionally, the rising wedge pattern adds complexity, indicating potential major reversals that could disrupt the current Primary UP trend.

Indicator: Relative Strength 14: Bearish turn

Relative strength has now turned higher while moving back above the 50 level, indicating strengthening momentum as price also moves higher. 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: 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, signaling potential reversals that could disrupt the current Primary UP trend.

USD Spot GOLD – DAILY: Resistance

USD gold has again moved higher to find resistance at the 2717.0 level. In the larger picture, the breakout higher from the major pennant formation is important. This breakout indicates a potential shift in market sentiment and reinforces the underlying bullish momentum. As traders closely watch for further advances, the RSI’s movement will be critical in assessing the strength and sustainability of this trend.

If the price manages to sustain above the 2717.0 resistance level, it could pave the way for further upward movement and potentially establish new highs. However, any failure to hold above this level may result in a pullback, providing an opportunity for traders to reassess their positions. Moreover, the RSI’s behaviour around the 50 level will offer valuable insights into the market’s next move.

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: 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.

AUD GOLD – DAILY: Primary UP Trend.

Given the current closing high, this remains a very strong signal for Australian-based Gold miners’ price appreciation. The current Primary UP remains strong and intact. As the AUD Gold price advances, the next significant resistance level to watch is around the A$4,500 mark.

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.

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.

SILVER Price structure: Daily UP trend

Silver’s recent performance has shown a modest uptick over the past week, yet it is crucial for the price to maintain its hold on the $29.60 support level. This level is not just a psychological threshold but a technical level that, if held, could indicate the beginning of a more substantial upward trend. Failure to sustain above this support might signal a potential fallback into the prevailing downtrend, thereby dampening the prospects of a near-term reversal. Traders will need to keep a vigilant eye on the price action around this key level to gauge the future direction of Silver.

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: 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 base for a reversal of trend. The $29.60 now provides a key support level for traders to monitor this week.

AUSTRALIAN VOLATILITY INDEX: The equities trader’s compass.

The current volatility closing value has moved lower to close at the key 11 level following a large spike higher during the week.  Current closing value indicates the XVI volatility level is just within 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.