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Black and White Technical Report: The Week Beginning 02/10/2021

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets

During the past trading week, further declines occurred in all markets except Oil.

Some very important support levels have been tested and so-far held with some reversal bars showing up on Friday’s close.

Historically October is a bullish month and there is no evidence to suggest otherwise for this October.

The Evergrande saga is not over, and further news may adversely move the markets.

Gold and Silver have put in important reversal bars for the tests of support lows.

These markets may provide some great trading opportunities during this week.

Oil closed on a 2 year high, energy equities and futures should offer some great trading this week.

 

XJO WEEKLY    
Price structure:
The decline last week has shown an outside period down close (OPd). The a, b, c labels have been reapplied as this retracement takes place. What should have been a bullish week off the Hammer bar 2 weeks ago has closed on the 7197-support level. 6900 remains as the next key support should price decline further. However, the OPd is often the selling “flush” required to mark the low area. This week 7197 will be the key level to close above to give insight to a potentially bullish October the bear killer. Underlying primary trend remains UP.


Indicator: Relative Strength 14
RSI is below the 70 and now the 50 level after negating the potential momentum divergence signal, but as mentioned, has now set a new 12-month low reading.
The RSI should be monitored for a continued move below the key level of 50 to show a continuing shift lower to negative price momentum. 

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets
Comments from last week:  The importance of drawing support and resistance levels has been highlighted the past week with the XJO Index finding the 7197 (7200) area as support. The Weekly chart shows how this level has been in play since the high of January 2020. Drawing levels on charts give you an overall perspective of market action and sets up trading scenarios to work with. The high close in the weekly range following a retest  (c) of an historic support level offers the view of a potential retest of 7530.


XJO DAILY
Price structure:
Thursday saw the close of the quarter finish 19 points higher. With Friday closing to a new low. As with the Weekly, Friday finished with an OPd, potentially marking the low.  This closing price level has met the highs of Q1 2020 this is an important level for the Bulls to defend in the coming days. Price failing to set a new low on Friday gives the market a cautionary buy bias for the next 2 days.

 

Indicator:  Relative Strength 14
With the indicator remaining below the key 50 level this would be monitored for further weakness. Traders should notice the higher low reading set on Thursday with Friday’s price decline failing to take out that low as price set a lower low from Wednesday. Daily price momentum is still regarded as negative, however the overall declines are becoming weaker.

 

Indicator: VOLUME  
Trading volumes are relatively high compared to previous months. With price volatility so high, the observation of price churn would apply. This type of price action is often found in both Top and basing patterns. Last Friday’s OPd was completed on less volume than the Wednesday decline.

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets

Comments from last week:  The daily chart has developed an interesting “closing price” resistance level at 7370. Following the FO Low testing, the WEEKLY support level of 7200 last Thursday’s large range bar sets up a further follow-through higher in the coming week.  Traders now have clear levels of market support and resistance. Failure to move and close above 7370 would give a strong signal of lower lows ahead.

 

S&P 500 WEEKLY
Price structure:
The Weekly Candle structure for the S&P 500 is developing a series of lower shadows, indicating buying at a low price. The important observation is the closing price is well off the low price set mid-week. The support range of 4240 to 4320 has held so far.  A closing price below these levels would alert traders to the potential retest of 4050 in the coming weeks. However, the technical bias is bullish off current support levels.

 

Indicator: Relative Strength Indicator 14
Relative Strength has again remained below the 70 level, in line with the underlying price decline.  The Sell line is shown around the 65 level; this has now been reached. It can also be observed that the RSI can track sideways below the “70” level and above the 50 level as price creep/consolidation takes place.

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets

Comments from last week: Compared to previous weeks the price bar of last week is a large range of price move. The close in the high part of the range suggests further follow thru to retest the highs of the past 3 weeks. This market has now entered the most important phase before a potential Bear market unfolds. Should the Index fail to take out the August high, a lower high is often the early signal of lower price ahead. This market remains within the confines of a Primary UP trend; there is NO evidence of a Bear market at present.

 

S&P 500 DAILY
Price structure:
Another tentative trendline is broken, highlighting that support and resistance “levels” are more important. The daily price has retested the 3 bar low price of 4305, last Friday’s engulfing high close offers the buyers further opportunity to retest the 4444 level. Should a daily close occur below 4300 the next key level for support is 4240. 

 

Indicator: Relative Strength 14
The Relative Strength has set a higher low (so far) as price closed lower last Thursday. There is potentially a bullish divergence Buy signal developing. Traders will now monitor the RSI for a movement above the 50 level to confirm any Bullish price action.

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets

Comments from last week:  The a, b, c reversal is now complete. With the earlier “tentative” trend line broken, the new tentative trendline is now in place following the 3 bar reversal pattern following through to close above the 4444 level mentioned in last week’s comments.  Price has reversed back into the Weekly UP trend and would be expected to retest the 4536 level. Failure to reach this level in the coming days will give traders an insight into underlying market sentiment.

 

NASDAQ DAILY
Price structure:
The long term trendline is now broken along with the key support level of 14765. Last Friday’s bullish hammer bar gives the Index potential for retesting the trendline in the coming day. Traders would look for a continuing close above 14765 as a bullish signal. Should further price weakness occur below 14535 the index would look to the 14073 level, this would be the retest of the initial breakout in June 2021.

 

Indicator: Relative Strength 14
Relative Strength has made a new low in line with the current price decline. The up turn from Friday’s bullish hammer may be an early change in price momentum. This should not be monitored for a close above the 50 level in line with further price gains.

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets

Comments from last week: As with other Indices’ the Nasdaq has recovered higher following last Monday’s retest of the long term trendline. (the importance of drawing and keeping accurate trend and support lines). The a, b, c type retracement is now complete following the 3 bar reversal from the trendline retest. (c)  This index would now be monitored for a retest of the 15534 level in the coming days.

 

USD Spot GOLD – DAILY     
Price structure: No evidence of a Bull market.
Following the September price decline, last Thursday saw Gold set an impulsive range bar followed by the inside range of Friday, indicating the market has moved to become balanced. The $1764.30 level once again shows its importance, this time as resistance. Historically Gold follows through higher following an impulsive range bar. A close over the $1764.30 level will give some insight to a potential move higher in the coming days and weeks.


Indicator: Relative Strength 14
Relative strength moving below the 50 level is heading back to the 50 level, a signal of increasing price momentum with the sharp move higher and should again be monitored for a further move higher above the 50 level.  

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets
Comments from last week:
  Gold has failed at the retest of the $1788.0 level, building a bearish flag and setting a new low last Thursday on the breakdown. The Weekly trendline remains in play as the current price target is circa $1720. The underlying Primary trend of Gold remains Down. In the short term support remains at $1725 and resistance is shown at $1834.0

 

SILVER DAILY    
Price structure:
Silver has traded down to meet an important level of $21.60. The short term level of $22.50 may provide some resistance in the coming days. A strong close over this level would set a challenge to the downtrend line. Silver remains in a Primary downtrend, however short term momentum appears to be changing for the buyer to enter the market.

 

Indicator: Relative Strength 14
Current Relative Strength is now viewed as potentially bullish, so traders should look for an RSI swing bullish divergence signal as the first sign of real support. With last Wednesday making a new price low but the RSI failing to set a new low is the first signal of Bullish divergence. The 50 level is easily the first target.

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets
Comments from last week: Silver remains within the confines of a Primary Down trend. The OP and impulsive movement 2 weeks ago remain in play on this Daily chart. The current level of $22.50 has the potential to set an important support level in the coming days. A move lower targets the next support level at $21.60.

 

AUD GOLD DAILY    
Price structure:
The AUD Gold price remains the key support for local producers NCM, NST, EVN and SLR along with the juniors. This current consolidation in price with last Thursday’s up swing is a bullish signal for further gains.

Indicator: Relative Strength 14
Relative Strength moving back to the 50 level is in line with price movements. Price momentum has again turned positive, a further rise in price will see the RSI move over the important 50 level.

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets

Comments from last week:  The current price decline in line with the underlying USD gold price is not providing support for the local Australian Gold producers.vResistance at 2477 was again tested last week with an immediate rejection. The next level of support remains at $2326.0.

 

COPPER DAILY   
Price structure:
Copper continues to retest the $4.00 level in what should have been a bullish week following the Hammer retest. The price chart remains in consolidation above the $4.00 level with solid resistance shown again at 44.33. This may take months to resolve, and off traders short term trading opportunities both long and short. The shadow of higher inflation globally weighs on the price of copper.

 

Indicator: Relative Strength 14
The RSI has turned flat but is at risk of again crossing below the 50 level as upward momentum slows. Relative Strength remains at an 18 month low reading.

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets

Comments from last week:   With $4.00 again retested, Copper remains within the confines of a trading range. However, the high close of last week (hammer) sets the potential for a break above the important $4.33 level and ultimate retest of the highs above $4.50. As an indication of price strength an immediate follow-through must occur to show buyers in control.

 

AUSTRALIAN VOLATILITY INDEX
The XVI is now reading a high volatility value above the key 13 level. This may place downward pressure on equities. This week look for a lower reading as further support for a Bullish October. The XVI is the difference of 1–3-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 observation to the underlying market.

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets
Comments from last week:
This new driven past week has seen the XVI spike higher into negative territory for equities. However, the final close below the 13 level is viewed as a positive for the coming week. The theory that low volatility precedes high volatility has held true.

USD DOLLAR INDEX  
Price structure:
The USD remains in a Bull market, confirmed again with the breakout over the 93.45 level. Current price structure is building a bullish flag pattern for a strike at 94.70. This will place pressure on currency crosses EUR, AUD. Good for Australian Gold producers and Iron Ore producers.

 

Indicator: Relative Strength 14
Relative Strength has decisively crossed the 50 level to turn bullish and moved over the 70-level indicating strong price momentum. This is a very good indicator of strong bullish momentum underway; the final downturn is in response to the formation of the building bullish price flag.

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets

Comments from last week: The rising USD Index has again found resistance at 93.45, the small continuation pennant at present indicates a bullish bias for this index. This is a big level to cross with 94.70 as the next target as the underlying Primary UP trend continues.

 

WTI CRUDE OIL
Price structure: This commodity is news driven by supply – demand.
WTI continues to grind higher with an important closing price above $75.20. Traders would look for a retest and hold of the $75.20 level as a sign of price strength. WTI Oil has closed at a 2 year high as the Primary UP trend continues to develop with the $100 level as the long term target.


Indicator: Relative Strength 14
RSI set a sharp reversal from the “30” level to move over the 50 level, look for a further rise in this indicator to the 70 level as confirmation of the underlying Bullish view in the current price action.

Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets
Comments from last week
: The WTI contract continues to push higher to retest the $75.20 level in line with the underlying Primary trend. A solid close over the $75.20 level sets up the contract for a move to $100bl in the coming months.

  • Black and White Technical Report: The Week Beginning 02/10/2021, FP Markets
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