XJO WEEKLY
Price structure: Consolidation remains
There is further consolidation in the Weekly chart as the Index remains between 7632 support and 7910 resistance. This period of consolidation does not change the current UP trend. It remains a bullish consolidation above support. Based on the current range low to high, the expectation is for a breakout to the high side, which has recovered more than 50% of the prior week’s decline. The month of June is marked with Tax loss selling as the end of the financial year approaches.
Indicator: Relative Strength 14 – Poor momentum
Relative Strength has turned lower as part of the current consolidation. Only further movements towards the 70 level will remain a bullish signal for further price gains. However, during range price consolidation, the RSI naturally moves to the neutral 50 level. Should the RSI reading move below the 50 level, the strong indication is for negative momentum to develop.
Comments last week: The Bullish “Pivot” setup discussed last week has failed to bring further buying to the market, with a complete reversal seen in the price action last week. The Weekly price movement remains between the resistance of the 7910 all-time high and Support showed at 7632. No reversal of the Primary UP trend has occurred; however, a close below the 7632 level would show a technical reversal of Trend. Last week’s inside range (IPd) shows the market “in balance”.
XJO DAILY
Price structure: Bullish move.
Last Friday, the index advanced from the two small range days following the “Pivot reversal” set last Tuesday. Internal support at 7700 points was held last week to set a short-term base. Early signs of Trend failure will be identified, when price closes below this critical level. As the trading swings narrow, a breakout is imminent, with the current short-term target remaining at 8000 points.
Indicator: Relative Strength 14:
The Relative Strength Indicator (14) turned sideways into the close on Friday; the overall neutral momentum is a result of the smaller price movements that are also reflected in the Relative Strength moving to 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 Bearish reversal remains a concern.
Comments from last week: The shortened trading week started with an impulsive move lower with further consolidation in the form of short-range bars at the low of the (Tuesday) range. The internal Technical support level shown at 7700 has provided some mid-week support. The past week has remained mixed between weakening resource stock and strengthening financials. Until multiple sector strength develops, the market may remain range-bound between 7580 and 7910, with 7700 as the key level for the Index to remain Bullish.
S&P 500 WEEKLY: Resistance breakaway
The current breakout above 5270 continues to move above the short-term trendline. The Index is currently being lifted by the overweight Tech stocks with falling market breadth (Bearish) behind the leading TECH sector. The S&P remains at risk of a corrective move lower. The current breakout is in line with the Primary UP trend and has met the target of 5500 points. A closing price below the short-term trendline will offer the first signal of trend reversal.
Indicator: Relative Strength Indicator 14
Relative Strength has turned sideways as the momentum indicator improves. With the reading moving over the 70 level, positive momentum remains very strong. As discussed last week the RSI is developing a bearish divergence signal with a movement setting a lower point on a higher market again 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.
Comments from last week: The S&P shows a strong momentum, trending away from the recent consolidation at the 5270 level. The Index is currently being lifted by the overweight Tech stocks with falling market breadth (Bearish) behind this leading sector. The S&P remains at risk of a corrective move lower. The current breakout is in line with the Primary UP trend and targets 5500 points. A closing price below the short term trendline will offer the first signal of trend reversal.
SPX DAILY
Price structure: Key Reversal in place.
The S&P Index has again set an Outside period down close (OPd) Thursday, this is a key reversal signal and must be resolved to the upside quickly to show buyers remain in control. The recent price Gap remains the primary target on any follow through should price decline in the coming days. On this chart historically, the OPd has halted price movements with the largest decline occurring during March April 2024.
Indicator: Relative Strength Indicator 14
Relative Strength Indicator has moved over the 70-level indicating an improvement in Bullish momentum, and is currently turning lower (Friday) while above the 70 level. A continued move lower towards the “70 level would be a bearish signal with the expectation of further declines. 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 S&P500 has set another “GAP” in the chart, the potential for a “GAP” down in price leaving an island top remains. The current short term trendline remains in place, a price move lower may see this line tested. Island Tops can be the precursor to a sharp reversal in price as the buyers at the high are left abandoned. No solid “sell” signal is showing with the ultimate target of 5500 remaining in place.
NASDAQ DAILY
Price structure: Key reversal in place
As with the S&P, an outside range down close has halted the recent price advance to just below the 20,000 level. The current price has moved to a level that remains further “extended” from the 200-day moving average similar to the February 2024 levels that saw some follow-on consolidation take place. The first signal of a Bearish reversal will be a close below the “GAP” level. The underlying Primary trend remains UP.
Indicator: Relative Strength 14
Last week saw the momentum indicator turning higher to sideways above the key 70 level. The RSI could now be monitored for a potential further movement lower below the 70 level indicating the first slowing of bullish momentum move is underway, this may provide some early insight to overall Primary trend reversal. Relative Strength moving higher above the important 70 level shows Bullish momentum remains strong.
Comments from last week: The driven Nasdaq riding on a wave of “AI” expectation, driving earnings higher has “gapped” the Index higher last Wednesday with further follow through. The current price levels remain “extended” from the 200 day moving average similar to the February 2024 levels that saw some follow-on consolidation take place. The first signal of a Bearish reversal will be a close below the “GAP” level. The underlying Primary trend remains UP.
USD Spot GOLD – DAILY: Bearish flag.
The constrained rally in Gold saw the $2,360 level tested with immediate selling lowering the price to the lower level of this Bearish Flag pattern. A further breakdown below this important $2288.0 support level would see significant selling take place with $2222.0 as the target level. As Gold remains within a trading zone with Resistance shown at $2431.3 and Support indicated at $2288.0, a move below this level has a developed price target of $2,135.0.
Indicator: Relative Strength 14
The RSI is turning lower, and has closed below the key 50 level. The Relative strength is a momentum indicator and has turned negative at these levels indicating price momentum over the current 14 day look back period is weakening. Long term traders should monitor this Daily chart for a 5th major yearly top developing at this level with further declines in the long term.
Comments from last week: The very strong range OPd discussed last week has resulted in a group of small range price bars remaining above the $2288.0 support level. It is clear a larger trading range is developing as discussed from when the all-time high of $2431.30 was set and not eclipsed. The “FO” fake out again seeing strong selling lower price back to the $2330 level where most of the recent price action has clung too. A further breakdown below this important support level would see significant selling take place with $2222.0 as the target level.
COPPER – WEEKLY: Resistance breakdown.
This week we highlight the Chart of Copper (HGc1). Following the impulsive advance in price from the breakout at $4.00, an exhaustive move with a final extended range retested the March 2020 high shown at $5.01. Profit taking has lowered the price with a confirmed Pivot reversal now in place. The short term trendline is now confirmed with the low of last Friday testing the tentative line. With late buyers above $4.50 now in a losing position, further consolidation at this level may develop in the coming weeks. A break in price below the Trendline would target the $4.00 breakout level.
SILVER Price structure: Valid Trendline in place
Silver set a small Bull trap last Thursday as price moved higher over the $30.0 level with immediate selling on Friday setting an Outside range down close (OPd). The market has moved back into the small consolidation range below the $30.0 level and above the $28.80 support level. Silver along with Gold may now enter a long period of consolidation following the recent seasonal move higher.
Relative Strength 14:
Currently the Relative Strength is turning lower from above the 50 level, indicating price 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 Down Trend.
Comments from last week: The Silver chart has developed a 3-point Trendline as price finds buyers at the $28.80 support level. This confluence of support must continue to find buyers over the $30.0 level to remain bullish. A further decline below this important level targets the $26.20 level. The Primary (Weekly) trend remains UP.
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 lower below this key 11 level. 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.
For continued support of equities, the XVI should remain subdued below the “13” level.
The cost of 3month forward PUT options is decreasing from recent elevated 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 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.