Black and White Technical Report: The Week Beginning 03/08/2020

Black and White Technical Report: The Week Beginning 03/08/2020, FP Markets

Unlimited liquidity continues to propel the US markets higher, helped along by some strong reporting within the Nasdaq and S&P 500 tech companies.

Australia has not followed the US higher instead continuing with further consolidation within a trading range.

Earnings will be the focus in the coming week, leading to individual stock volatility, traders should be reminded the Index itself is not a representation of an individual stock.

Gold and Silver continue with exceptionally strong price gains as the USD Index continues lower.

Australian dollar Gold also found legs in the week to test a significant resistance level traders should be aware of.

West Texas Oil remains stagnant and continues to test the $42 resistance level.

 

XJO WEEKLY
Price structure:

Another week of consolidation within the defined upper and lower boundaries.
Within this “Index” the financials ex BNPL stocks have forced a decline in the Index.
The lower 5720 level will be the decisive level in the coming week.
A reverse pivot is now complete with  a close below the low of 2 weeks ago. And a further Weekly low could be expected.
The Adage of “never short a dull market” remains, in this case the previous Q2 of 2020 remains within the defines of a Primary UP trend, and this may prevail as there is NO evidence of a primary down trend.

 

Indicator: Relative Strength
Relative Strength, again still nothing to see here, sits just at the “50” level, and pointing sideways, suggesting a balance in price momentum remains.
Further consolidation in the price chart may this this dip below the key 50 level.

 

Indicator: MACD
MACD remains a swing “buy” signal, and shows how useless this indicator is in large time frames.

Black and White Technical Report: The Week Beginning 03/08/2020, FP Markets
Comments from last week
: Another rejection week within the marked boundaries of the developing Secondary movement. A closing breakout above 6198.6 seems difficult with rejection back into the middle of the range. Without positive news a follow through lower could be expected in the coming week with 5720 the key support level. A close below 5970 would confirm this scenario.

 

XJO DAILY
Price structure:
The current breakdown from the longer-term underlying trend line is concerning.
Last Friday’s move lower from a string of small range days accompanied by high volume states the Sellers are in control.
The key support level in the coming week is 5720, a close below this level would be a very bearish signal.
Only a daily closing value over 6160 would create a bullish picture.

 

Indicator:  Relative Strength
RSI has turned sharply lower as would be expected with this type of price weakness. The move below the “50” level is concerning and has been the early sell signal for the larger Weekly time frame (above).

 

Indicator:  VOLUME
On any significant price movement, volume will be an important indicator of market commitment for that direction. A breakout high must be accompanied by higher Volumes.
During June – July there is an overall general decline on trading volumes, while not immediately bullish, consolidation volume patterns often decline during this phase of development. This current volume study shows the increase in Volume on the current breakdown in price.

Black and White Technical Report: The Week Beginning 03/08/2020, FP Markets
Comments from last week
:  Last Tuesday showed the pennant breakout, the immediate reversal confirms the “Bull Trap” referred to last week. The underlying “tentative” trend line has now been breached, This weakness indicates the leading equities in the Index have failed in price strength.

 

S&P 500 WEEKLY
Price structure:
The Weekly chart shows a strong close pushing into the GAP area left open during Q1 2020.
This is a very strong signal for further gains, trading should monitor this Gap level for price rejection, a very bullish signal would occur with a close over the GAP level.
 

Indicator:  Relative Strength Indicator
Relative Strength turning higher from above the key 50 level last week is a further sign of a increase in upward momentum, the RSI needs to remain above the key 50 level and continue to rise for current momentum to remain positive.
A move below this 50 level is a signal of bearish momentum.

Black and White Technical Report: The Week Beginning 03/08/2020, FP Markets


Comments from last week
: A 6th bar breakout from the last high point with an intra week movement into the GAP area followed by immediate rejection back into the price range boundaries. Further price rejection back towards the midpoint of the range could be expected. Consolidation period within Indices’ can last for many months. The key in the coming week will be the 3096 midpoint level to hold on any price decline. With the UP Primary trend the GAP will remain a price target on any bullish news to hit the markets.

 

S&P 500 DAILY
Price structure:
The price structure still remains a consolidation with Friday last week completing a bullish Pivot point with the potential for price to move higher.
The 3280 high of the OPd from 7 trading periods back will be the first “go to” level in this Daily chart.
The Daily trend remains “UP” with the potential to move back above the short term trend line.

Indicator: Relative Strength
RSI signal line has rolled higher again and now again resides above the key 50 level, no divergence is showing in momentum and price. The swing sell trade signal has failed, however within the primary Up trend the failure rate of this type of signal is high.

Black and White Technical Report: The Week Beginning 03/08/2020, FP Markets
Comments from last week: 
Further price declines may be expected as last Thursdays Outside period has potentially set a high for the short term. The Bullish Gap open last Friday may set the tone for some short term price rally, however the OPd remains a formidable barrier for higher prices in the coming days. Best outcome in the coming days is further price consolidation to reaffirm the Bullish trend in place.

 

GOLD – WEEKLY
Price structure:

The underlying price structure remains in a Primary UP trend.
The whole world still wants to be “long” Gold, until they don’t.
Two very strong impulsive weeks with a high showing of $1980.56. Often the first reaction is to “take profit”, however the closing price at the high suggests a strong hold with Buyers in control.
Historically a difficult period for the “longs” holding as the chart indicates after very strong movements a period of consolidation follows.
Traders can only monitor the $1980.56 high for a breakout or the Weekly midpoint  of $1939.65 for support.

 

Indicator:  Relative Strength
Relative Strength remains very strong now above “70” this is NOT a sell signal only a sign of very strong price momentum. Should the price move into a consolidation period this indicator would be monitored for a divergence signal. ( rising price / falling RSI ) 

Black and White Technical Report: The Week Beginning 03/08/2020, FP Markets
Comments from last week:
Last week’s extraordinary large range “impulsive” move higher will have a lot of buyers wanting to hold a profit. Any price weakness may see some short term selling.
Key support for the coming week will be the round number of $1800.
Relative Strength remains positive above the “50” level and has made a new high in line with the price chart. This sets up the potential for continued bullish RSI signal above “70”.

 

AUD GOLD  DAILY
Price structure:
The 4% move in USD Gold with only a 0.6% move higher in the AUD has propelled the XAUAUD price higher to the AUD $2765.22 resistance level, a very good outcome for the local Gold producers.
The high close on Friday from the small pennant is a bullish signal for further gains.
Underlying Primary trend remains “UP” with further gains expected.

 

Indicator:  Relative Strength
With the RSI now rising, the crossover of the 50 level is a good sign upward momentum may continue in the short term. The current reading over “70” is reflective of the strong momentum, but the signal line has moved sideways, this will now be monitored for bearish divergence.

Black and White Technical Report: The Week Beginning 03/08/2020, FP Markets
Comments from last week
: A significant momentum breakout above the 2600 level with the $2740 resistance level in sight. Australian Gold producers were marked down heavily last Friday in the face of this rising $AUD Gold price. With he underlying $AUD looking bullish for the coming week, some further price weakness may be expected in the XAU-AUD price in the coming days. A retest of the $2600 breakout level would be the first target.

 

SILVER DAILY
Price structure:
Silver is an Industrial metal and will be responsive to improving economic news.
The daily chart of SILVER shows the very significant OP (outside period) from last Tuesday.
This statistically significant event may have marked the high as consolidation now takes place in the forma of a continuation pennant.
Further consolidation is now expected in the coming days as the OP is resolved.
The daily $22.90 low is the expected support level in the coming days.

 

Indicator: Relative Strength
With RSI now “rolling”  lower showing the declining price momentum, this is now being monitored for a bearish divergence signal. 

Black and White Technical Report: The Week Beginning 03/08/2020, FP Markets
Comments from last week:
Silver and Copper made very strong moves in the past week in anticipation of improving economies. The daily impulsive moves from the $19.0 breakout level has finished with a small consolidation towards the $23.00+ high. This remains a very bullish structure for the coming week. Any short term profit taking with a close below the $22.00 may indicate a top in place and risk should be adjusted. However the Primary trend is UP. The Relative strength Indicator. The RSI over 70 is a reflection of underlying strong price momentum. The current reading (91) is high and may see a rollover should price decline.

 

AUSTRALIAN VOLATILITY INDEX
Volatility has moved sharply higher as news around the Covid 19 2nd waves grips the market.
This is a bearish signal for the equity markets (ex GOLD and Silver).
Volatility ranges are now expanding, this is reflecting also in the equity markets daily movements.
The XVI is the difference of 1 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 observation to the underlying market.   

Black and White Technical Report: The Week Beginning 03/08/2020, FP Markets
Comments from last week
:   Consistent rejection of lower values has the XVI around the “20” level for many weeks. The result of uncertainty about a 2nd wave Health pandemic and the ability of economies to recover in the short term. Forward risk is still being priced in and higher values could be expected.

 

USD DOLLAR INDEX
Price structure:
With a retest of the MAY 2018 lows the USD Index has posted the first potential reversal signal. (or a short cover into the end of the week). Fridays low of 92.54 (May 2018 low) will be the critical level to hold in the coming days.
Only a close over 93.53 would signal a reversal in place, and this level should be monitored in the coming days.
A rise in the DXY will place pressure on the AUD and offer a potential further rally in the AUD Gold price.


Indicator:  Relative Strength:
RSI
shows a steeper move and a further turn lower, below the “30” level, a signal of very weak (positive) price momentum. 

Black and White Technical Report: The Week Beginning 03/08/2020, FP Markets
Comments from last week:
 The expected support of 95.71 has failed with an impulsive (strong) move, the issue with this chart is the closing breakdown below the March low at 94.65. First glance would suggest a corrective move underway. This 94.65 will be the key level in the coming days. Traders would look for a closing price above this level early in the week to give any chance of a strengthening  $USD. Gold traders would watch this closely as the weak USD my be the precursor to increasing inflation.

 

WTI  CRUDE OIL
Price structure: This commodity is news driven.
The tyranny of 9 Weeks of consolidation, with no lead for Oil stocks or traders of Oil stocks.
Last week posted a lower high and lower low, setting up a potential “Bullish flag” pattern, but may take weeks to play out. The important observation is the price structure remains Bullish. 

 

Indicator: Relative Strength
Relative Strength has remained over the 50 level, having set a lower high point followed by last week’s sideways move, a sign of price consolidation.

Black and White Technical Report: The Week Beginning 03/08/2020, FP Markets
Comments from last week
:  Eight weeks of sideways consolidation. Last week saw the price finally move over the key $42.00 level only to fail back below and into the $40.00 closing price range. Another case of don’t short a dull market, sellers have had opportunity to lower the price instead consolidation prevails. Driven by production and demand, the European and US summer season may hold the price for weeks to come.

  • Black and White Technical Report: The Week Beginning 03/08/2020, FP Markets
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