XJO WEEKLY
Price structure: Consolidation

Failure of the Index to trade over the 7910 level clearly shows the developing resistance level and developing the reading channel. The Inside period (IPd) down close is a Bullish outcome overall, indicating real selling failed to break the previous week’s low point. Going forward, the observation may develop. This becomes a “lower high” point with a further retest towards 7632 points, as was observed 6 weeks prior.

Indicator: Relative Strength 14 – Slowing momentum

Relative strength has turned sideways to lower as part of the current consolidation. Only further movements towards the 70 level will remain a bullish signal for further price gains. Last week, the RSI value moved lower while above the 50 level, in line with the current price move. However, a new indicator high value is required over the late Q4-2023 high point to set a bullish tone.  Should the RSI reading move below the 50 level, the strong indication is for the current low to negligent momentum to continue.

Comments last week: Last week, we saw rejection below the 7910 level with a low close in the range. In the coming week, the 7910 level will be the key observation for traders to gauge market strength. The underlying primary trend remains UP. Good technical support remains at 7632; this will be the level to monitor for a bearish break to the downside should selling continue in the top heavily weighted banks and resource stocks.

XJO DAILY
Price structure: Trading range

The 7800-level referred to last week has failed to provide support, with last Friday setting an impulsive move lower towards 7700. The lower Volume study indicates this was done at a “low volume”. Low volume declines are a bullish signal, this week look for the 7700 level to provide support. Should the Index move below this level, the next support in this consolidation zone is 7472. This consolidation area has a 5% range high to low, as the market is within a Primary UP trend this range can only be viewed as Bullish for a breakout higher.

Indicator: Relative Strength 14

The Relative Strength Indicator (14) turned lower into the close on Friday. The overall decline in momentum is a result of the larger price consolidation developing, which is reflected in the Relative Strength moving to a neutral reading (50). This is the level where traders would be looking for a further sell signal below the 50 level, but with the current readings at the “50” level now, the potential for a reversal remains high.

Comments from last week: The daily close over the 7800 level remains the technical level to hold on the open this week, a breakout to the high side looks the better probability given the strong move higher last Thursday, with Friday selling down to the 7800 level. Although the Index remains within a developing consolidation zone, the important observation is the current retest of the March 24’ high of 7910 remains in place with the potential to break out higher.

S&P 500 WEEKLY: Resistance breakout

Two weeks ago, the index moved to an all-time high and set a Fake Out (short-term bearish), with last week setting another new high but closing at the opening range (Doji) and, importantly, over the 5270 level. Buyers and Sellers were unable to 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 4920 level to confirm a major top in place.

Indicator: Relative Strength Indicator 14

Relative Strength has turned sideways as the momentum indicator slows and remains below the 70 level but above the important 50 level. In the coming week, traders would monitor the RSI for a bearish divergence signal with a movement lower towards the key 50 level, as any Index price consolidation towards the 4920-4818 level may re-assert a bearish RSI signal with the indicator turning lower towards the 50 level and towards the 30 level. 

Comments from last week:  The Weekly range is short compared to recent high-low ranges. However, the Index value has made a new all-time closing high, reaffirming the Primary UP trend in place. The 5270 level should now provide immediate support for any decline in the index value.

SPX DAILY
Price structure: OPd

The “gap open sell” discussed last week has developed into a small consolidation range, with last Thursday setting an Outside range down close (OPd); this is highly indicative of a short-term top developing with 5342 points as the all-time high. In the Daily short-term view, a close below the “Gap” level of 5250 would offer a short-term sell signal. History shows the larger range down close bars offer significant resistance in the near term outlook.

Indicator: Relative Strength Indicator 14

The Relative Strength Indicator has moved to the 70 level, indicating bullish momentum, and is currently tracking sideways below the 70 level. A continued move higher over 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.

Comments from last week: The S&P500 has set a second “Gap open.” These types of movements, where the Buyers open the market, can indicate a short-term euphoric top developing and should be monitored for a closing value below the “Gap” area to confirm. The two small range bars set last Thursday and Friday are a bullish flag pattern developing; a breakout high could be expected.

NASDAQ DAILY
Price structure: 2nd Breakout back retest

The Daily level of interest is the 5250 level, which is the lower side of the “Gap open sell signal” window. A further close below this level would confirm a short-term top is in place. The OPd is a signal of exhaustion of the buyers. With the current price action remaining over the March 24 highs, the potential for a more conclusive sell-off has developed.

Indicator: Relative Strength 14

Last week saw the momentum indicator turning lower to sideways below the key 70 level. The RSI could now be monitored for a further movement lower below the 70 level, indicating a loss of bullish momentum move is underway; this may provide some early insight into the overall Primary trend reversal. Failure of the Relative strength with another move above the important 70 level shows Bullish momentum slowing.

Comments from last week: The Nasdaq set a new breakout above the 18,464 level as part of the overall Primary UP trend. The lower close on Friday is the retest of this level, which must hold for Buyers to remain in control. Should this small resistance/support level not hold in the coming days, the 2nd Gap open sell signal will be the area to hold. Overall, this is a very positive move by the index to set higher highs during this week.

USD Spot GOLD – DAILY: All-time reversal.

As discussed last week, the $2431 level remains a significant resistance level to cross.  The Daily chart shows a move higher last Monday to set a Bull Trap Fake Out (FO) that has developed into a 3 Bar reversal pattern, followed by an immediate sell-down. Gold is now developing a trading range while support remains at $2280. A breakdown below this level would give a very bearish signal for further declines. The current risk is a Major Top is developing, and further profit-taking will take place. The overall Primary UP trend remains in place until a lower high is set.

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: Gold staged a directional move during the past week but remains below the $2431.3 spike high point (SH). Gold looks set to make a new all-time momentum high. The $2431.3 level will remain an area where profit-taking may take place, putting the buyers under pressure. The overall Primary UP trend remains in place.

AUD Spot GOLD – DAILY:   Bullish pivot failure.

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, the decline in the $USD Gold price was unable to offset the decline in value. The OPd Outside range down close is a bearish signal for further declines in the coming days.

Comments from last week: The $AUD Gold price has improved on gains in the $USD Gold price even though the small rally in the $AUD from $0.66 to $0.67 has discounted part of the current rally. Overall the AUD Gold price has set a bullish pivot point with a potential retest of the highs around $3750 remaining in place.

SILVER Price structure: Reversal

Silver is developing into a new consolidation range above the key $30 level. A further decline below this important level would send a very Bearish signal to short-term holders that a top may be in place. For Silver to remain “Bullish”, price should exceed the $32.0 range. However, with the current Pivot reversal in place, the $30.0 level will be the focus this week for buyers to hold. Silver is at risk of setting an all-time high, with further declines to come in the coming weeks.

Relative Strength 14:

Current Relative Strength has turned higher from above the 50 level, indicating upward momentum has slowed. A further close of the RSI over the 70 level adds to the current momentum. Only a continued move higher and over the 70 levels would reflect a solid change in the underlying price momentum as the current Primary UP trend becomes an extended move.

Comments from last week: Two weeks ago, the rejection of the May 21 level of $28.80 was a bearish move. However, the Primary UP trend has reasserted itself with a significant breakout higher, with an Impulse range being set, showing the buyer in full control. Impulsive moves in the past have led to some consolidation in the following days. A retest towards the $30.03 level would signal the sellers are moving the price.

AUSTRALIAN VOLATILITY INDEX:  The equities traders compass.

The current volatility closing value has moved above the 11 level again following a move lower below the 11 level. The closing value indicates that the XVI remains within the “Bullish 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 months (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 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 against 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.