Black and White Technical Report 19/09/2022

XJO WEEKLY Price structure:

IMPORTANT DISCLAIMER

Follow through from the BUY hammer was limited with a quick look over the 6930 level before closing at the low and again retesting the tentative trendline. The hangman reversal bar has been further confirmed as a lower high (below7200) with the retest of the June low underway. The “range” high to low is noticeably larger for the down close bars over the past 5 months, something that should be acknowledged by all traders.

Indicator: Relative strength 14:

Relative strength has again closed below the 50 level and set a lower high as part of the overall decline in relative strength. Price momentum has turned negative on the lower side of 50. However, should Relative strength move above the key 50 level a sign of improving price momentum would prevail.

Comments from Last week: Following the impulsive price movement 2 weeks ago the Index has moved lower to fulfill the impulse lower. With late week buying the high close has set a “hammer” bar buy signal. With follow through higher this may set a higher low point and early indications of a new trend. However, the close remains below the 6930 level. A close over this level would signal a retest of 7200 underway.

 

XJO DAILY Price structure:

Strong down close bars last Wednesday and Friday, with Friday closing below the 6765 level and on the low for the session. Given the bars are large range high to low shows the sellers in control of the session. The Daily trend resumes to down, a break of the pipe reversal low will have buyers on the wrong side of the market and may bring in Stop loss selling, as the June low become the target level.

Indicator: Relative strength 14:

The Relative strength Indicator (14) reflecting the underlying price momentum has moved lower below the 50 level indicating weak momentum. Relative strength is moving in sync with the trending action of the market and does not offer any trading signal other than momentum is to the downside.

Indicator: VOLUME:

Last Friday’s higher volume bar was developed from an INDEX re-weighting event. The rally early last week was set on low volume showing a lack of conviction by market traders.
Only stronger volumes over 1Bil on a Daily basis would indicate strong new money buying.

Comments from Last week: Buying has set a late week pipe reversal signal at the completion of an identifiable a,b,c movement a highly reliable reversal pattern evidenced by the follow through last Friday. A further close over the 6930 level would offer a further bullish signal, First daily resistance remains at 7130..

S&P 500 WEEKLY Price structure:

Weekly outside range, a very bearish signal of reversal and being conducted at the key level of 4050 points resistance level. This confirms the FO+1 point as the high point until a close above 4050 that may retest that level. The Primary trend of the S&P500 is down with the 3715 level currently being retested.

Indicator: Relative strength Indicator 14.

The reading below the 50 level again sets up the sell signal, last week the indicator turned higher, indicating a change in momentum, this week reversing the momentum. A movement towards and over the 50 level would be a very strong short term bullish signal. Positive momentum requires a reading above the key level of 50.

Comments from Last week: The outside period set last week (OPu) is a highly reliable signal indicating a low is now in place with a close at the 4050 resistance level. A decisive follow through would be very bullish for a retest higher past 4200 to again test the 4545 level. A breakout above the 4250 level sets a new primary trend in place. Price reversal at this juncture would be a very bearish outcome for a strong move lower..

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

Gap open sell confirmed with the large range decline last Tuesday has been followed by a break of the Trendline, however the current gap open is regarded as a short term buy signal within the current down trend. This is the place to watch for a reversal pattern like a pivot point or 3 bar reversal. A test and reject of the trendline would be very bearish in the coming days.

Indicator: Relative strength 14:

Relative strength has continued to move higher from above the 30 level to test above the 50 level and again move lower as price action moves lower. Price weakness for this level will see the RSI move lower.

Comments from Last week: The pivot point from last Wednesday has setup a primary movement. The opening gap on Friday is regarded as a gap open sell. The higher low is now in place. The Primary trend remains down, a breakout over the 4300 point level would indicate a new primary UP trend underway.

NASDAQ DAILY Price structure: Primary DOWN Trend remains

The Nasdaq posted a short follow through from the 3 bar low to also post a Gap open sell signal that was immediately followed thru with a large range down close bar last Tuesday. Again a retest of the tentative (2 touch) trendline is underway. Traders would look for support at this level following last Friday’s gap lower. (gap open buy signal)

Indicator: Relative strength 14:

The Relative strength indicator moving back towards the 50 level a signal of positive momentum. With a continuing move, the indicator may cross lower below the 50 level, price movement will remain positive with a continued reading above 50 and have the potential to retest higher levels.

Comments from Last week: The current higher low not retesting the long term trendline and setting a higher low indicated by the 3 bar reversal pattern is a very bullish signal for further gains, an immediate retest of 13556 is underway. As with the other Indices the Nasdaq has gapped open last Friday indicating buyers well in control.

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

Gold remains with a well defined down trend with the most recent “bear flag” following through with a break lower below the $1676 support to test the March 2021 support point at $1656.0 Currently a small bullish Relative strength divergence signal is developing as the chart also shows an early stage price reversal pattern at this support level.

Indicator: Relative Strength 14:

Price momentum is working lower with the RSI turning higher setting an equal low as price makes a closing lower low sets up the divergence signal. (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: Gold is developing a second bear flag pattern with the potential to retest lower towards the $1676 level. These flag patterns have around 50 % success rate of indicating direction, however given price has remained within the declining channel. The underlying Primary trend remains down. .

SILVER DAILY Price structure: Bull market? – Not yet

The bear flag described last week has failed with a breakout higher to develop into a bullish flag, identified by the overlapping price bars declining against the previous strong move. Confirmation would see a closing price breakout above the $20.44 level. Silver remains within a primary down trend with a early stage bullish breakout.

Relative strength 14:

Current Relative strength is rolling higher with the movement above the 50-level, RSI turning higher again would reflect the underlying momentum turning positive or consolidating.
A continuing move above the 50 level and higher would be very bullish signal in the short term. Price consolidation in this bullish flag results in the relative strength turning towards the 50 level.

Comments from last week: Silver is setting up a bear flag pattern within the down channel with the next target of $17.20 being a support level from June 2020. The $18.40 level is the 2020 breakout level where Silver moved to the higher to the $27.0 level. Silver remains with the definition of a Primary down trend.

AUD GOLD DAILY Price structure: Consolidation.

Australian dollar Gold now remains trendless as price consolidates. The break in price lower last Thursday has not seen any bullish reversal last Friday, A continuing move lower could be
expected on a stronger $AUD. This will keep pricing pressure on the Australian Gold producers and may set lower prices this week.

Indicator Relative strength 14:

Relative strength has turned sideways and lower from above the 50 level to below the 50 level, this shows an decrease in positive price momentum and remains a strong warning for further declines.

Comments from Last week: Australian dollar Gold now remains trendless as price consolidates. The reversal pivot at the 2537 level sets up a retest of 2440. The Australian dollar gold price has remained within a large consolidation range for all of 2022 so far. In face of rising material and wage costs for Australian Gold producers the margin squeeze on profit is holding Goldies lower.

COPPER DAILY Price structure: “V” recovery

Last week saw a retest both ways between resistance at $3.80 and support shown at $3.47 with the closing price equal to the opening price for the week. Expect consolidation above $3.47 in the coming days, a breakout over the $3.80 level would signal a ne Primary UP trend underway.

Indicator: Relative strength 14:

Current reading has swung from below the 30-level to read higher as downward momentum has slowed to the pipe reversal 2weeks ago, however the current reading remains below the
key 50 level. The key now, is for the RSI to swung back above the 50 level as a reflection of ongoing price gains. A sharp cross of the 50 level is required to offer a strong buy signal.

Comments from Last week: Copper remains at risk of moving lower. However the pipe reversal is a strong signal buyers have re-entered giving price support for a retest of $3.80. A further close over $3.80 may set a new primary movement to retest the $4.0 level.

AUSTRALIAN VOLATILITY INDEX:

Volatility reading has moved sharply higher and remains above the 13 level indicating forward pricing of PUT options remains strong. In general, lower equity prices or consolidation of equity prices is indicated as the reading remains above the 13 level. For continued support of equities, the XVI should move below the “13” level. 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:

Current price action displays a consolidation pattern above the 109.47 level, following the strong impulsive move last Tuesday. This current 109.47 support level will the key area to hold into next Friday’s close. A further move higher will bring pressure onto commodity prices and place selling pressure onto equity price movements.

Indicator: Relative strength 14:

The Relative strength has turned lower in line with price movements indicating a loss of upward momentum and should now be monitored for further consolidation as the current reading is above the 50 level but below the 70 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 current retracement in the USD is providing support for commodity prices. The underlying primary trend remains UP. The last bar (Friday) is mildly bullish for further gains.

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

This commodity is highly news driven around supply -demand. Current consolidation is at risk of breaking below the $84.25 level with price currently closing towards that level and at the low end of the OP (outside period) range set 3 weeks ago. This current $84.25 level is also the breakout level set in June this year, a breakdown below this level could action a decline as Stop loss levels are taken out. The WTI contract is at risk of developing into a down trend.

Indicator: Relative strength 14:
The RSI turning towards the 30 is a result of strong price declines as momentum slows, price remains at risk of moving lower only a move over the key level of 50 would signal increasing positive price momentum.

Comments from Last week: Oil is consolidating below the $94 support level, the breakdown below $94.0 could have followed through lower. Strong support is indicated at $84.25 provides a floor in the short term. The long term trendline is no longer relevant as price moves sideways.
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