Is this the new Bull market? It’s a start, but probably not, the current US stimulus package may provide economic support, US markets closing towards the week’s high is encouraging, however, momentum is slowing.
This week the technical resistance to higher prices increased again as markets have had a great run to date. Although the Nasdaq has a “gap” trade underway (see chart notes).
Gold and Silver continue to languish inside a trading range, this week Silver is setting up a 2nd 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 downtrend.
The Index is still working on the “corrective” type of movement. A retest of the 6930 level would be ideal to produce a trending movement. The resistance level of 7200 remains the primary target in this current movement. The small range of last is suggesting hesitation by the buyers and may result in some consolidation at this level above 6930.
Relative Strength has closed above the 50 levels. Overall price momentum still remains on the positive side of 50 (just). However, should Relative Strength continue to move higher over the key 50 levels 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 levels a sign of improving price momentum is emerging.
Impulsive movements are often the precursor for a continued movement, last Thursday’s strong movement with volume confirmation potentially indicates the final short cover by the bears as the market is flooded with buyers. The Daily view of the Index is within a clear uptrend that may continue as no reversal patterns are showing. A close over last Thursday’s high would confirm this observation.
The Relative Strength Indicator (14) reflecting the underlying price momentum has moved higher above the 50 levels from below the 50-level indicating the continued change to positive momentum. A continuing move above the 50 levels would be a very positive indication for further gains in the underlying Index.
Last Friday’s lower volume bar is not an encouraging signal to indicate continuing new buyers are entering the market. The Daily Relative Strength is potentially setting up a divergence sell signal and may signal a retest of the 6930 level on this slowing momentum.
Only strong volumes over 1Bil on a Daily basis would indicate strong new money buying.
Well, here it is, a strong close over the 4200 level on an expanding range from low to high bar. Buyers are in control with the week closing on the high. However, this brings the scenario where everyone is in profit, any decline from here may be sharp as these profits are protected. The complete price movement from the low remains “corrective” as no trending action is taking place. Not a great signal for continuation until a retracement takes place a offers the seller a window to take control.
Relative Strength has shown a Bullish divergence signal 4 weeks ago, setting the 2nd Pivot point low. The “Buy Line” shown has been crossed 3 weeks ago, as this indicator continues to show improving positive price momentum. Continuing price movements show the reading over the 50 levels 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: A not-so-solid 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.
During the past week, the S&P 500 staged a clear break over the 4177 level to reach the 200-day moving average, an important development. The historical 4310 resistance level looms large at this pivotal 200-day average pricing point. A clear signal of continuation will be evident with a close over the 200-day average.
The Daily Relative Strength shows improving price momentum to the upside. RSI is now above the key 50 levels and rolling higher again above the 70 levels, a further movement lower below the 70 levels would indicate the potential for a price breakdown lower in the short term.
Comments from Last week: 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.
Observations last week focused on the 13556 level. The Nasdaq has now reached this level on a solid high close last Friday. Continuation higher could be expected with the potential retest of the “GAP” opening above 14535, (a 1000 points higher). There is a lot of resistance to clearing prior to that level, however, that remains the technical target. In the daily time frame, the Nasdaq is within a UP trend.
The indicator moving towards the 70 levels a signal of very strong momentum price movement underway. With a continuing move, the indicator must remain over the 50 levels, the price movement will remain positive and have the potential to develop into a new UP trend.
Comments from last week: 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 the 13000 level as a signal of weakness to come.
The continuing movement outside of the well-defined price channel of the past 6 months is a significant development for the underlying support for Gold. The “retest” of the $1779.20 level has held with the strong close last Friday a good setup for further gains to retest the $1834.0 level.
Price momentum is working higher and well above the 50 levels, the Relative Strength Indicator again turning higher off Friday’s price action is telling for a potential consolidation area breakout ahead. (Price consolidation would naturally see the RSI drift back to around the 50 levels. A strong movement, either way will show the next directional move.)
Comments from last week: Gold again meets its nadir point around the $1779-$1780 level at the downtrend channel line. The underlying primary trend remains down. Last Friday’s inside range shows the market in balance, a close above the Friday high towards $1800 would be a strong bullish signal for further gains.
The follow-on Pivot point developed from the price action of 2 weeks ago has gain setup a nice price consolidation area above $20.44. The weekly high close of Friday is a good signal for further movement higher as the buyers are willing to hold over the weekend. With a primary trend in development, $22.50 remains a significant target for the coming weeks.
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 levels and higher would be very bullish in the short term, and the potential for a further move higher remains only should the price close above the $20.44 level.
Comments from last week: 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 $20.44 level, with the expectation of a retest of this important level.
A tough week for AUDXAU as the AUD$ rallied on the US employment number fallout. With USD$ gold looking bullish this may follow through into the AUDXAU only if the AUD$ remains stable at current levels or lower. This week a close over 2537 would be helpful for the local producers, however, rejection remains a strong possibility for the coming week with the price to retest the 2440 lows. The $AUD Gold price remains within a large consolidation area below the $2712 level with no evident trend.
Relative Strength has turned lower from above the 50 levels, this shows a decrease in positive price momentum and remains a strong positive for further declines. Traders should again look for a cross of the 50 levels as a very positive development for underlying price support.
Comments from last week: 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.
Copper staging a “V” recovery to test $3.80. This is a good start to full recovery into the 2021 consolidation area above $4.00 and below $4.80. Last Friday the retest was completed on a short-range low to high bar. Some consolidation below this level could be expected early this week.
The current reading has swung from below the 30-level to read higher as downward momentum has slowed. The key now, as the RSI has swung back above the 50 levels as a reflection of ongoing price gains is for a sharp cross of the 50 levels giving a strong buy signal.
Comments from last week: An inside week in the copper price indicates a “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 in Copper prices. A close below these $3.47 levels would signal a potential retest of $2.98 in the coming weeks.
Starting to look very bullish for Australian equities with the XVI falling back towards the “13” level. The small decrease in volatility has been reflected in the late rally in Australian equities. The ultimate closing observation is for a lower reading week on week. For continued support of equities, the XVI should move below the “13” level.
3 months forward PUT option insurance has decreased, suggesting a more risky 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 the 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.
The decline in the US inflation number has set the DXY sharply lower showing a completed pivot point last Friday and confirming the long-term trendline. A close over the 105.80 level would give an indication of a retest of the 107.40 level underway. A breakdown below the long-term trend line would offer a very bearish signal for further declines.
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 levels. This will move lower to sideways should the price decline further, only a continued reading above the 50 levels would indicate continuing strong price momentum.
Comments from last week: 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. 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 levels.
Last week’s inside bar can mark the point of balance in the market, the high test and rejection during mid-week, at $94.0 is a bearish signal for further declines to retest the $84.25 level.
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 levels. The strong move towards and below the 30 levels is confirming weakening price momentum.
Comments from last week: 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 from 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 suggests further price declines to retest the $84.25 level.
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