Black and White Technical Report: The Week Beginning 25/10/2021

Black and White Technical Report: The Week Beginning 25/10/2021, FP Markets

The S&P500 and the NYSE composite have set an all-time high during the past week, however, this was not confirmed by the other Majors with the Nasdaq potentially setting a lower high point. I often refer to larger time frames “Primary trends”, while all are within the confines of a Primary UP trend, they do need to confirm each other, at present they do not, with a divergence between the Nasdaq and the S&P. This should be monitored for further divergence and a potential major top reversal signal.

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

The China Evergrande debt saga is not over, and further news may adversely move the markets, in particular, the threat of contagion to other credit providers in the real estate sector.

Oil has put in a new high and is now targeting the 2014 high of over $100.0bl.

XJO WEEKLY
Price structure:

IMPORTANT DISCLAIMER
The information in this report is of a general nature only. It is not personal financial product advice. It does not take into account your objectives, financial situation, or needs. You should therefore consider the appropriateness of this general information in light of these. The Australian School of Technical Analysis (www.astatrading.com) recommend that you refer to the Product Disclosure Statements of any financial products which are discussed in this report before making any investment decisions. ASTA accepts no responsibility for your actions and recommends you contact a licensed advisor before acting on any information contained in this general information report.

With the Index moving off the 7200 area of support the Weekly range high to low remains small and indecisive. The 7530 level is the next major resistance level to cross, failure before this level would give a Bearish signal. Primary trend reversal will be complete should the market close below the 7180 level. In the coming weeks, 7200 will remain key support with 7632.0 as major resistance. Currently, the underlying primary trend remains UP.

Indicator: Relative Strength 14
Relative Strength has remained positive, as the reading is above the 50 levels, the next move in the RSI will be telling for overall market strength or weakness. The RSI should be monitored for a continued move above the key level of 50 to show a continuing shift to bullish price momentum.

Black and White Technical Report: The Week Beginning 25/10/2021, FP Markets

Comments from last week: The weekly close over the IPu from 2 weeks ago is a good outcome for the buyers. The chart now confirms the 7200 area as support, this should be monitored on any price retracement in the coming week. Within the Index stock remain mixed, the financials have held up giving underlying support to the index in general. Australian companies are conducting AGMs this can be some individual volatility, but overall, the Index looks to be heading to the next resistance level at 7530. The market needs to put in a new high in the coming weeks, the advent of a lower high being set could signal the beginnings of a bearish phase.

XJO DAILY
Price structure:
The Daily chart shows the importance of the 7430 level with clear rejection for the last 3 trading days of the week. The open and close of Thursday and Friday remain very tight as the market reaches this balance point. The bigger picture risk is the Index fails to take out the higher resistance levels of 7530 and 7632, if this longer-term (many months) scenario plays out the whole price picture from June 2021 onward may be a very broad topping pattern.

Indicator: Relative Strength 14
The RSI has moved over the important 50 levels but has turned sideways as a reflection of slowing momentum. In the short term, a move below the 50 levels would be Bearish and would send a strong signal to short term traders of a potential top in place.

Indicator: VOLUME
Trading volumes are generally declining on a rising price structure; this is not a great signal for the Bullish.

Black and White Technical Report: The Week Beginning 25/10/2021, FP Markets

Comments from last week: The Daily view offer a different picture in the short term, the current resistance level of 7370 is being challenged, a bullish outcome would be for a Daily close over this level in the coming days. Of concern is the general chart structure without any impulsive UP days the price structure from early October maybe form a bearish flag pattern, a close below 7216 would signal a new leg down.

S&P 500 WEEKLY
Price structure:
The S&P has set a great technical signal for higher prices with the close of last week towards the high and setting an all-time high closing price. The NYSE also set a new all-time high. On a cautionary note, with the market at the highs, profit-taking may take place. Should the market retrace the first level of support remains at 4320.

Indicator: Relative Strength Indicator 14
A signal of increasing momentum as the Relative Strength Indicator (14) turns higher on the 2nd of large range price movements of last week and the week prior. The Relative Strength Indicator is in a good place for further strength, a movement over the 70 levels would indicate strong price momentum. Historically the indicator can remain over the 70 levels for an extended period of time as seen during July – September.

Black and White Technical Report: The Week Beginning 25/10/2021, FP Markets

Comments from last week: A strong pivot point from the 4320-support level is a good signal for the continuation of the UP trend. The strong gain in technology stock continues to underpin the markets. However, failure of the Index to set a new high in the coming weeks would be a bearish signal, traders should be aware a breakdown of the 4240 level would put the index into a downtrend. At this point in the chart, the strong range of last week suggests continuation higher.
The underlying Primary trend is UP.

S&P 500 DAILY
Price structure:
The cautionary note in the Weekly chart comes from the Daily observation of an OP (outside period) set on Friday. This type of range has a statistical significance of marking market turning points. The past week is showing several “gaps”, a price decline from this level would be looking to fill the gaps for a potential retest of the Trendline. The S&P has made an extended price movement this type of 8-day price gain is subject to short term profit-taking.

Indicator: Relative Strength 14
Relative Strength Indicator (14) has turned higher over the 50 levels a signal of underlying positive price momentum, a further movement over 70 would indicate a further strong price momentum. A close below the 50 levels would alert traders to failing upward price momentum.

Black and White Technical Report: The Week Beginning 25/10/2021, FP Markets

Comments from last week: The S&P has a new “tentative” trendline in place as the reversal has set a pivot point Wednesday – Thursday last week. The index is leaving several open Gaps, these areas will be monitored for support on any price retracement in the coming days. With the 4444 level now cleared, the all-time high of 4536 remains the first target in this Primary Bull market move. The common picture across all markets (indices) is the potential broadening top pattern beginning from June 2021. Currently, the primary trend remains UP.

NASDAQ DAILY
Price structure:
The chart of the Nasdaq is of concern, the first observation is the potential “lower high” coming into place below the 15534 level. The first level of support during any price retracement is 15184 followed by the 14765 level intersecting the Trendline. The broader observation is the Nasdaq is setting a broad topping pattern beginning from the month of July. The broader risk is a follow on with other Indices as many Nasdaq equities are weighted into the S&P500.

Indicator: Relative Strength 14
Relative Strength Indicator moving over the 50 levels is a strong sign of improving price momentum, however, the current downturn should be monitored for further declines.

Black and White Technical Report: The Week Beginning 25/10/2021, FP Markets

Comments from last week: As with the S&P the Nasdaq is gapping higher, given the chart structure of the past 2 months the risk is the current move could be the euphoric exhaustion move common at the top of extended bull markets. Further evidence of this type of activity would be another Gap higher combined with extended daily price ranges. The growing concern is the formation of a major top pattern, that still may take months to confirm.
The underlying Primary trend is UP.

USD Spot GOLD – DAILY
Price structure: No evidence of a Bull market.
Gold had a great week following the potential for a follow-through from the impulsive move of 2 weeks ago. The current test and rejection of the down trendline with a close below the key $1800 level shows the buyers unable to hold the momentum move. Consolidation above the $1764.30 level would be very bullish for a further move higher in the coming weeks.

Indicator: Relative Strength 14
The Relative strength has recovered and moving above the 50 levels potentially heading back to the 70 levels, a signal of increasing price momentum with the sharp move higher and should again be monitored for a further move higher.

Black and White Technical Report: The Week Beginning 25/10/2021, FP Markets

Comments from last week: Price rejection of the $1788 area with a strong impulsive price move suggest all is not well in the buyer camp for Gold. Friday has set a reversal pivot point from resistance but stopped short of breaking the $1764 support level. With price follow through lower this week a close back over $1764.30 would be a bullish signal. The key observation in this chart is the Higher low (HL) set during the last week of September has not been broken to the downside, but the current lower high may change that as potentially the Weekly trendline is again tested.

SILVER DAILY
Price structure:
The Daily chart of Silver highlights the strong momentum move higher from the down trendline breakout. Last Friday’s rejection candle (shooting star) is a clear rejection of the previous high at $24.90. This week may see further profit-taking; however, a breakout higher again would be a VERY bullish signal for the retest of $25.52 and higher. Silver has set a corrective move higher in a downtrend, for a trend to be confirmed a retracement must take place before a 2nd move higher.

Indicator: Relative Strength 14
Current Relative Strength is now viewed as strong bullish, as the reading moves over the 50 level and heads into the 70 level.

Black and White Technical Report: The Week Beginning 25/10/2021, FP Markets

Comments from last week: Silver has moved outside of the down trend line from the June 2021 highs. Last Friday’s low retest the trendline and saw silver trade higher off the low into the close. (A very different picture to the Gold price.) The underlying Primary price trend for Silver is down, the move into the close of last week could be a strong signal for overall trend reversal, $25.52 remains the first resistance level to test.

AUD GOLD DAILY
Price structure:
The XAU in AUD terms has closed on $2400 a key level to hold to be psychologically bullish. This long Secondary type of price movement can be the precursor to a sustained breakout. The down trendline is the first level for price to cross to confirm a bullish outlook. This remains positive for local Gold producers NCM, NST and SLR. The smaller players will remain news dependant.


Indicator: Relative Strength 14

Relative Strength moving back below the 50 levels is in line with price movements. Price momentum has again turned flat to negative, a further rise in price will see the RSI move over the important 50 levels.

Black and White Technical Report: The Week Beginning 25/10/2021, FP Markets

Comments from last week: Weaker Gold price and Stronger $AUD has put the XAUAUD price significantly lower last Friday. Last week’s comments had the XAUAUD set to move higher. Further consolidation looks to be on the offering between $2300 and resistance of $2477.0
The Australian Gold producers may see some selling this week.

COPPER DAILY
Price structure:
The Gap open from the Friday close to the Monday open has met with immediate selling, last weeks comments mentioned the risk of selling following a euphoric price move. The price moving back to test the $4.50 level has set a Dark Cloud price structure and the commodity may see further selling in the coming week. Further price weakness may retest the key $4.33 level. The whole price structure January 2021 is consolidation between $4.00 and the current 2nd retest of the all-time high of $4.80

Indicator: Relative Strength 14
The sharp turn lower in the RSI a reflection of the sharp price movement is not a good signal for further momentum gains. The key, for now, is the RSI remains above the 50 levels as a reflection of ongoing and positive underlying price momentum.

Black and White Technical Report: The Week Beginning 25/10/2021, FP Markets

Comments from last week: The strongest of the commodity moves last week. Copper also set the strongest price range bar in many years. However, the Weekly gap open over $4.33 is of concern, this might be a euphoric move and may see profit-taking in the first days of this week. If any retracement takes place $4.33 remains as the key support level. Australian producers OZL, MIN, BHP, will benefit in the coming week.

AUSTRALIAN VOLATILITY INDEX
With the Volatility in decline, equities have maintained a positive bias. News around the Evergrande saga has the potential to change this. 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 forwarding 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 25/10/2021, FP Markets

Comments from last week: Early last week the XVI moved higher as equities moved lower. The decline in the XVI reading back into the Bullish zone is a good indicator for the market to remain on a positive note this week.

US DOLLAR INDEX
Price structure:
The bearish divergence signal of 2 weeks ago has played out into lower prices. The current retest of the 93.45 level shows the Index in consolidation from the highs of 94.0. The overall longer-term trend is up, this would now be monitored for support at these levels with the potential to retest the highs at 94.70 in play.

Indicator: Relative Strength 14
The Relative Strength has turned down in line with price movements and momentum and has the potential to move below the 50 levels on further price weakness.

Black and White Technical Report: The Week Beginning 25/10/2021, FP Markets

Comments from last week: Following strong gains early last week the now confirmed “divergence” signal shows the new high being made on lower price momentum. This bearish signal may have indicated the top is in for the DXY, with the outcome showing as a stronger $AUD among others. Traders would monitor this chart for a bullish reversal signal in the coming days. The underlying Primary Trend of the DXY is UP, in this current retracement the 93.45 level must hold to keep the chart technically strong.

WTI CRUDE OIL
Price structure: This commodity is news driven by supply-demand.
The Weekly chart of the West Texas contract has now entered into an extended move. This type of continuous price gain can be subject to profit-taking. Any price weakness should be monitored for a retest of the KEY $75.20 level, this must hold to remain bullish for the longer term.
The underlying Primary trend for the contract remains UP.
Oil $100.

Indicator: Relative Strength 14
RSI has set a sharp reversal to move over the 50 levels and now the 70 levels, look for a further rise in this indicator as the current reading move over the 70 levels is confirmation of the underlying Bullish momentum in the price action. Close inspection shows the indicator “rolling” sideways putting the longs on alert of slowing momentum.

Black and White Technical Report: The Week Beginning 25/10/2021, FP Markets

Comments from last week: Historically the WTI contract can put in extended price moves lasting many weeks. This current movement has the hallmarks of an extended price move (higher).
$75.20 is now the key support level on any price retracement in the coming week/s. The current trendline remains in place as further price support at around the $75.20 area on any price retracement.

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