Black and White Technical Report 08/08/2022

Is this the new Bull market? It’s a start, but probably not, the strong US Job numbers have been disregarded as a bearish signal with US markets closing towards the weeks high.
This week the technical resistance to higher price increases as market test the breakdown level as resistance.
Gold and Silver continue to languish inside a trading range, this week Silver is setting up a Bullish flag pattern and may provide the breakout many traders are waiting for. The West Texas contract has broken the $94.0 support level as the commodity enters a primary down trend.

 

XJO WEEKLY Price structure: Bearish Flag playing out
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The developing “bear flag” has failed with the Index moving over the first real resistance level of 6930. The current price movements amount to a primary movement underway. A breakout above the 7200 level without a price retracement prior would setup a “corrective movement”, that may be subject to sharp profit taking.

Indicator: Relative strength 14:
Relative strength has closed above the 30 level. Overall price momentum still remains on the negative side of 50 (just). However should Relative strength continue to move higher over the key 50 level a sign of improving and positive price momentum is emerging.

 

Comments from Last week: However as Relative strength continues to move towards the key 50 level a sign of improving price momentum is emerging.

 

XJO DAILY Price structure:

From indecision early in the week to a solid close. The Daily chart is setting new trending higher highs with full low to high range day last Friday. The retest last Wednesday may be complete against the 6930 level. It should be noted the Index has moved back into the larger consolidation area of the past 8 months. A retest of the 7437 level may develop, but consolidation area’s are just that an area where no real direction is found, this again may develop on a daily basis.

Indicator: Relative strength 14:
The Relative strength Indicator (14) reflecting the underlying price momentum has moved higher above the 50 level from below the 50-level indicating the continued change to positive momentum. A continuing move above the 50 level would be a very positive indication for further gains in the underlying Index.

Indicator: VOLUME:
Last Friday’s higher volume bar is not encouraging signal to indicate new buyers are entering the market. Rising trading volumes are required to confirm the upward bias of the Index. Overall these are not really present within the past 5 trading days. Only strong volumes over 1Bil on a Daily basis would indicate strong new money buying.

 

Comments from Last week: A good technical breakout above the 6765 level last Thursday with Friday “retesting” this important Resistance / Support level. This is the point of support for Buyers to hold in the coming days. With the Weekly chart displaying a Bearish Flag pattern an early breakdown will be evident in the Daily chart with a close below the 6600 level.

 

S&P 500 WEEKLY Price structure:

A not so solid follow through follow through higher last week as the Index meets the 4200 resistance level. However the Index did close higher than the open indicating buyers are willing to hold positions. To set a trending market a retracement is required followed by a move higher, without that movement the current movement is considered “corrective” and may be subject to profit taking. A further close over the 4200 level would be a significant positive.

Indicator: Relative strength Indicator 14.
Relative strength has shown a Bullish divergence signal 4 weeks ago, setting the 2nd Pivot point low. The “Buy Line” shown has been crossed and this indicator continues to show improving
positive price momentum. Continuing price movements show the reading over the 50 level to give a solid buy signal on momentum. Overall, this type of divergence signal is a good indicator for further price gains.

 

Comments from Last week: Form building a multi week base along the 3715 level this current push higher follows the previous weeks “pivot point”. Last week set a longer range bar than previous weeks ranges and confirms buyers in control, also indicated by the close towards the high of the week (set Friday).

 

S&P 500 DAILY Price structure: Developing bullish structure.

The S&P is setting a bullish daily consolidation pattern above the 4114 level and below the 4177 level, this tight range consolidation shows a slowing momentum (see RSI note) but remain bullish with a strong close last Friday. Directional movement may occur with a decisive breakout either way, based on current momentum the break higher should be expected.

Indicator: Relative strength 14:
The Daily Relative strength shows improving price momentum to the upside. RIS is now above the key 50 level and rolling lower below the 70 level, a further movement lower below the 70 level would indicate the potential for a price breakdown lower in the short term.

 

Comments from Last week: Sign of a trending market; The successful retest of 3940 with a strong pivot reversal following through to higher values. Current closing price movements are above the extended down trend lines, further confirming a momentum breakout move underway without resistance. Following a strong price move the expectation would be for further consolidation before the next decisive movement.

 

NASDAQ DAILY Price structure: Primary DOWN Trend remains
The Nasdaq shows an overall gain for last week. Current consolidation below the 13556 point level is the key area to watch. A close over this level would be very bullish for further gains. A short trendline is developing and will be closely monitored for a close below towards the 13000 level as a signal of weakness to come.

Indicator: Relative strength 14:
The indicator again moving over the important 50 level, the current rollover a result of the current price consolidation area, potentially an early warning of coming profit taking and further selling.
With a continuing move, the indicator must remain over the 50 level, price movement will remain positive and have the potential to develop into a new UP trend.

 

Comments from Last week: The consolidation period of May/June has been cleared by the current price movements. The Nasdaq has built a significant basing pattern that should hold price action in the immediate coming days/weeks. The Nasdaq has entered into a Daily UP trend with a series of higher lows and higher highs, the important observation is the breakouts above potential resistance levels. Only a daily close below the 12573 level would negate this view.

 

USD Spot GOLD – DAILY: Is it a Bull market? Answer = No
Gold again meets its nadir point around the $1779-$1780 level at the down trend channel line. The underlying primary trend remains down. Last Fridays inside range shows the market in balance, a close above the Friday high towards $1800 would be a strong bullish signal for further gains.

Indicator: Relative Strength 14:
Price momentum is working higher and above the 50 level, the Relative strength indicator again turning lower off Fridays price action is telling for a potential consolidation area to develop.
Price consolidation would naturally see the RSI drift back too around the 50 level. A strong movement either way will show the next directional move.

 

Comments from Last week: Precious metals have made higher prices in the past week, potentially a significant short cover operation as positions are closed. The threat of interest rates and inflation pressures may finally be adding to the support of the precious materials. Gold technically remains with the definition of a primary down trend.

 

SILVER DAILY Price structure: Bull market? – Early signals are important. –> Maybe now?
This type of “Bullish flag” pattern is a great trading signal, it allows the observation of an early turning point in the form of a “pivot” or “3 bar” both highly tradeable for a breakout
higher. With the current price action outside of the down channel the first bullish signal will occur with a close above the $20.44 level, with the expectation of a retest of this important level.

Indicator: Relative strength 14:
Current Relative strength is rolling lower but remains above the 50-level, RSI turning higher would reflect the underlying momentum turning positive. A continuing move above the 50 level and higher would be very bullish in the short term, and the potential for a further move higher remains only should price close above the $20.44 level.

 

Comments from last week: A sharp price recovery suggests a short position cover from the recent decline. Silver remains within a Primary down trend. The large consolidation area between support of $20.44 and resistance of $22.50 may provide some headwinds to further gains. However Silver remains highly tradeable into this area.. With the close sitting below the $20.44 level a close over this level will be an important development.

 

AUD GOLD DAILY Price structure: Consolidation.
An important move underway in $AUD Gold with the price closing back above the 2537 level. This offers trading opportunities in the local producers as A$ prices improve. The $AUD Gold price remains within a large consolidation area below the $2712 level with no evident trend.

Indicator Relative strength 14:
Relative strength has turned higher from below the 50 level, this shows an increase in positive price momentum and remains a strong positive for further gains. Traders should look for a cross of the 50 level as a very positive development for underlying price support.

 

Comments from Last week: The $2537 level has provided resistance again during the past week, only a closing price cross above this level would provide a strong buying signal. However, the upturn may remain a positive for local producers and follow on price gains from the past week.

 

COPPER DAILY Price structure: Primary DOWNTREND
An inside week in the copper price indicates “balance” above the key level of $3.47 – $3.50. This week look for further gains and a close above the important $3.80 level as a strong signal of recovery on Copper prices. A close below these $3.47 levels would signal a potential retest of $2.98 in the coming weeks.

Indicator: Relative strength 14:
Current reading has swung from below the 30-level as downward momentum has slowed. The key now, as the RSI has swung back above the 30 level as a reflection of ongoing price gains is for a cross of the 50 level giving a strong buy signal.

 

Comments from Last week: The follow on higher from the 3 bar reversal from 2 weeks ago has set a bullish pivot point. Often the market will attempt a “retest” of the low to confirm the sellers are exhausted. The strong range of last week suggest further gains as a follow through this week.

 

AUSTRALIAN VOLATILITY INDEX:
The small decrease in volatility has reflected in the late rally in Australian equities. Although the indicator moved higher the ultimate close is lower week on week.

For continued support of equities, the XVI should move below the “13” level. Last week the 3 months forward PUT option insurance has decreased, suggesting a more risk on approach. While the final reading remains above the key “13” level as a bearish indicator further declines in equities may 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:

 

USD DOLLAR INDEX Price structure:
The 105.80 level has again provided important support, consolidation below the 107.40 may be broken to the upside in the coming days. This will place pressure on metals and provide
overall weakness in the commodity stocks.

Indicator: Relative strength 14:
The Relative strength has turned lower in line with price movements and should now be monitored for further momentum weakness or further consolidation as the current reading
is on the key 50 level. This will move lower to sideways should price decline further, only a continued reading above the 50 level would indicate continuing strong price momentum.

 

Comments from Last week: The USD$ index is developing a consolidation area above the 105.80 level. A close below this level would offer a strong signal for further declines. However a signal of support would be a retest of the 107.40 level in
the coming days. Equities and Precious metals will react strongly to a breakout either way. The underlying primary trend remains UP.

 

WTI – CRUDE OIL, Price structure: Full Bull Market remains.
This commodity is highly news driven around supply -demand. The WTI contract displays a “corrective” price move with the price not forming any retracement area prior to breaking to this 25 week momentum low form the FO high. The confirmed trendline is broken and will be redrawn next week should a reversal pattern show. The large range “high to low” of last Friday’s move suggest further price declines to retest the $84.25 level.

Indicator: Relative strength 14:
The sell signal has developed now that the RSI line has crossed down below the internal low (red) line currently in-play and below the 50 level. The strong move towards and below the 30 level is confirming weakening price momentum.

 

Comments from Last week: The current retest of the trendline in confluence with the $94.0 support level gives a view that the WTI contract could break either way higher or lower (sorry). The next price movement will offer insight to the $94.0 level providing support or becoming the next resistance level.