Black and White Technical Report 04/07/2022

Short US week with 4^th July holiday today.

 

Good technical signals of a relief rally beginning, these take time but the signals are developing.

A number of 3 bar reversals have shown at key support levels, these are a great setup as a strong risk reward can factored into your trading plan.

 

Copper continues to decline closing below a big support level of $3.80, the strong message is Global GDP may be on hold for a while.

Gold sets up a “hammer bar” on the long-term trendline, local producers may finally find the bid after weeks of indecision.

Along with Silver, these metals are highly tradeable in shorter time frames.

This week Silver may develop a bullish move with a close over $20.44, a turtle soup type bullish setup.

 

XJO WEEKLY     Price structure:  Bearish Flag playing out

 

Last week the XJO attempted to push back above the 6640 level. Only a close above this level would be bullish in the short term.

The congestion of price action during Q1 2020 is a good place to find some support, with last week completing a 3 bar reversal setup.

This week will again be monitored for a close above the 6640 level as an important development towards a retest of the breakdown level of 6930.

 

Indicator: Relative strength 14:

 

Relative strength has closed above the lower 30 level (just). Overall price momentum remains negative.

Relative strength should now be monitored for a Bullish divergence signal.

 

Comments from Last week: Momentum to the downside has slowed with last weeks inside range. The range low to high is short and has no real meaning. Meaningful price bases take time to build to give buyer confidence to hold. The underlying Primary trend remains down. Price failure at this level may retest the 6200 level discussed last week. Look for a close above 6640 to maintain a bullish view.

XJO DAILY   Price structure:

Following a strong start to last week the rejection into the close on Friday has been completed on very low volume. This is a strong indication the sellers are exhausted for now.

The first Daily resistance level to clear this week is 6765, a close above this level would confirm a “higher low” in place and setup a retest of the 2^nd Daily resistance level of 6930 points.

 

Indicator:  Relative strength 14:

 

The Relative strength Indicator (14) reflecting the underlying price momentum has moved lower from below the 50-level indicating the current negative momentum. A continuing move above the 50 level would be a positive indicating further gains in the underlying Index.

 

Indicator:  VOLUME:  Rising trading volumes are required to confirm the upward bias of the Index. These are not present in the past 5 trading days.

Only strong volumes over 1Bil on a Daily basis would indicate strong new money buying.

 

Comments from Last week:  The 3 bar reversal developed early in the trading week last week and has developed further to close the week on the high. The Daily level of 6600 is the first key level to hold this week. This type of relief rally has the ability to move higher ultimately testing the important 6930 level as resistance. A price breakdown below 6500 would a strong negative for further gains.

S&P 500 WEEKLY Price structure:

 

The Pivot reversal of 2 weeks ago has held the Index and may continue to provide support following last weeks attempted sell down to “retest” the 3715 level.

The underlying Primary trend remains down, however last weeks “lower shadow” is a strong indication of early buying at a “low” price.

 

Indicator:  Relative strength Indicator 14.

 

Relative strength has shown a Bullish divergence signal with last week setting the 2nd Pivot point low.

The “Buy Line” shown is the indicator of improving positive price momentum should the reading close over this level.

Overall this type of divergence signal is a good indicator for further price gains.

 

Comments from Last week: A key Pivot point reversal is now displayed in the S&P500 also filling the Gap open left 2 weeks ago, this is a very bullish signal for further gains. With a lot of overhead resistance, firstly at 4050 the Index may consolidate further at this level to confirm the sellers are finished. The underlying Primary trend remains down.

S&P 500 DAILY Price structure:  Shortend week ahead.

 

The daily chart of the S&P500 indicates a new “higher low” is now in place with last weeks Pivot 3 Bar reversal. This is a solid indication of buyers entering the market before a new low was made.

Further price gains to close over 3940 would set a new Daily UP trend.

 

Indicator: Relative strength 14:

 

The Daily Relative strength bullish divergence signal followed by a sharp up turn shows improving price momentum to the upside. Although still remaining below the key 50 level, a further cross over of the 50 level would be a strong buying signal.

 

Comments from Last week: The daily S&P500 shows a pivot point at the low followed by the gap up open. With last Friday gapping further higher an Island base is now in place, this again is a very bullish signal for further gains.
Last Friday’s price movement is an expanded range compared to the range in the early part of the week. A very bullish signal in the short term.
A daily close below 3800 would give a very strong signal the seller have returned.

 

NASDAQ DAILY Price structure: Primary DOWN Trend remains

A strong reversal signal in the 3 Bar pattern is good confirmation of early trend reversal following the Divergence Buy signal.
Price moving over the 12175 level will signal a new Daily UP trend and confirm the sellers are exhausted.

Indicator: Relative strength 14:

The minor divergence signal discussed last week has played out with the indicator moving to the important 50 level and this week returning to this important level.
With a continuing move over the 50 level, price movement will remain positive and have the potential to develop into a new UP trend.

 

Comments from Last week:  An early week 3 bar BUY signal also developed in the Nasdaq. Price has moved above the old long term trendline. ( this will be moved next week) Both the Weekly and this Daily time frame remain in a down trend, but this pattern is a strong signal of a base developing over the coming weeks. A close below 11,500 would be a strong signal the Buyers have left and would have potential to continue the down trend.

USD Spot GOLD – DAILY:      Is it a Bull market?  Answer = No

 

Last Friday set a “Hammer” bar, a very bullish reversal signal appearing on the long term trendline.

Price made new lows as a fake out move against the $1786.60 low set Mid May. During this retest the session bar was fully black with late buying coming in to lift the price to session highs, a very strong indication of short covering as buyers take control.

The first resistance level is $1834.0, a close over this level would give buyers strength to hold for higher prices.

 

Indicator:  Relative Strength 14:

Price momentum is working lower, the Relative strength indicator turning lower a reflection of the overall decline in price. The UP turn shows the momentum decline losing strength.

Price consolidation would naturally see the RSI drift around the 50 level. A strong movement either way will show the next directional move.

Comments from Last week:  Gold remains within a strong consolidation zone, and may remain tradeable on shorter time frames, this Daily continues consolidate below the key $1876.90 level as a strong signal no new buying is taking place. This week look for the $1834.0 level to hold as a weak bullish signal.

SILVER DAILY     Price structure:   Bull market? – Early signals are important. None

 

The midweek break of $20.44 saw the high momentum price movement to retest the July 2020 original breakout point, an overall decline of 25%. This is again an indication of a low beginning to develop within a Primary downtrend.

This week may develop a bullish move with a close over $20.44, a turtle soup type bullish setup.

 

Indicator:  Relative strength 14:

 

Current Relative strength is moving lower and remains below the 50-level, RSI turning lower reflects the underlying momentum.

A continuing move below the 50 level and lower would be very bearish in the short term, and the potential for a further move higher remains should price close above the $20.44 level.

Comments from last week:  The daily chart of Silver also shows a lack of buying interest with further consolidation below the $22.50 level. Silver may be tradeable on shorter time frames. Whereas the Daily gives no formal direction other than the potential for further consolidation. It is important to note that the support levels are holding, so a break either way from this consolidation area may give a very directional move.

 

AUD GOLD DAILY     Price structure: 

 

Consolidation continues between 2676 and support 2610.

Last Friday’s strong range “low to high” may be the catalyst to further gains to set a breakout signal.

For the current chart $AUD Gold remains within consolidation.

 

Indicator Relative strength 14:

 

Relative strength has turned sideways above the 50 level and moving towards the key 70 level indicating a increase in momentum. Relative strength may continue to track higher as price has the potential to retest the $2712.0 resistance level.

 

Comments from Last week:  As the $AUD remains below the key $0.70 cent level and USD Gold consolidates the AUD Gold price may also consolidate further. This will be a difficult signal to trade the local miners, but the chart should be monitored for a breakout higher or lower.

 

COPPER DAILY    Price structure:  Primary DOWNTREND

 

A reflection of the Global concern of an economic slowdown, Copper trades below the support level of $3.80lb.

The next support level is $3.47 – $3.50.

This is the level to monitor for a reversal signal, a close above the $3.80 level would be encouraging for the bullish.

 

Indicator: Relative strength 14:

Current reading has swung from above the 50-level to move lower to the 30 level, below this important divider between negative momentum and positive momentum reflecting the current reversal move underway.

The key now is for the RSI to swing back above the 50 level as a reflection of ongoing and any positive underlying positive price momentum at this important support level.

Comments from Last week:  The price of Copper has broken a very important support level at $4.00 to test the $3.80 level mentioned last week. This is a VERY important development for a view on the Global manufacturing outlook. Copper is used in most building and manufacturing processes along with automotive applications. This is a VERY bearish development and the Copper chart needs to close back above the key $4.00 level too give confidence to manufacturers

 

AUSTRALIAN VOLATILITY INDEX:

An increase in volatility has reflected in the late decline in equities.

3 months forward PUT option insurance has increased, suggesting a more risk off approach. While the reading remains above the key “13” level as a bearish indicator further declines in equities could be expected. 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 observation to the underlying market.

 

 Comments from last Week: The XVI value is expected to rise this week as forward protective risk is again priced in.

 

USD     DOLLAR INDEX   Price structure:

The $USD Index has failed to take out the 105.80 high as two rejection bars show from last Thursday/Friday. As expectations of a Global slowdown continue, the $USD Index may consolidate further at these levels.

 

Indicator:  Relative strength 14:

The Relative strength has turned sideways in line with price movements and should now be monitored for further momentum weakness as the current reading above the key 50 level could move lower, only a further reading above the 50 level into the 70 level would indicate strong price momentum.

 

Comments from Last week:  The continuation pennant in the USD Index, suggests a breakout higher with the underlying Primary trend in the back ground. A break of the Pennant lower would indicate a retest of the long term trendline underway. This will not change the underlying Primary trend, should support be found circa 103 level.

 

WTI – CRUDE OIL, Price structure:  Full Bull Market remains.

This commodity is highly news driven around supply -demand.

 

Price movement around the important $107.73 level indicates a market in balance.

A further move lower may retest the long term trendline as further consolidation may take place.

Only a closing price above the $116.6 0level would give the Bullish traders a view of higher price ahead, this looks doubtful based on the RSI sell signal in place.

 

Indicator: Relative strength 14:

 

Relative strength is developing a divergence signal as price makes a new high without the Relative strength making a new momentum high. The sell signal has developed now that the RSI line has crossed down below the internal low (red) line currently inplay.

Comments from Last week: The divergence signal referred to last week has played out further to the down side with a retest of the long term trendline. The final close on Friday sets a new “hammer bar”, a further close over the $107.73 level would be an important development for the Bulls.