Last I commented a Bear market was now in play, and happy to be wrong with a strong momentum rally from key support level has predominated during the past week.
With the US FMOC stating a set of interest rate rises will occur this year the markets seem to find clarity and bid higher.
Many key resistance levels remain above the current price level in all markets.
The commodities sector has cooled from some very serious bidding and short position cover two weeks ago, key levels are at play for support as the March contracts expire and the market looks to the next major expiry in June.
With the potential for the Reserve Bank of Australia to lift interest rates in line with Global peers, the underlying $AUD may remain strong and keep the $AUD Gold price in check at these current levels.
Key support at 6960 has held with a strong rally to close over 7200. The higher low in place sets up for further gains in the coming week. Overhead resistance remains at 7530 and will be the most important level to monitor this coming week. It should be noted the Index remains within a very large 12-month consolidation zone from 2021. Consolidation zones are low volatile events by nature and as seasoned market participants acknowledge, low volatility leads to high volatility, always. The new 3 touch trend line is now in place.
Relative Strength has turned higher and closed over the key 50 level. Price momentum has turned positive. As the Relative Strength Indicator reflects price momentum the current weekly closing price display increasing positive price momentum.
Comments from last week: The XJO 200 continues to consolidate below 7200 and above the key 6960 level. The longer look back shows this level contains price consolidation during Q2 2021 and further back in Q1 2020. A further price breakdown below 6800 level will place the market into a confirmed down trend. As current global events unfold a breakout higher may be short and sharp as the bigger picture of potential rising interest rates and increased commodity costs place a pressure on profitability of listed market entities.
The 2nd retest of 6960 2 weeks ago has resulted in a short consolidation period followed up with a strong 3-day rally over the 7216, the Index finished Friday with an Inside period up close (Ipu). With the final close on the high no sellers seem to be present, this sets up this week with a potentially strong follow through to test the 7370-resistance level. A loss of momentum would target the 7216 level as first support to hold.
The Relative Strength Indicator (14) reflecting the underlying price momentum has moved higher from below the 50-level indicating a shift to increasing positive momentum. A further cross below the key 50 level would indicate a loss of positive momentum.
Trading volumes have been relatively high during the past week leading to Friday’s strong options expiry volume on the afternoon accent, volume will be monitored for any further increase as a signal of buyers entering the market.
Comments from last week: The daily chart of the XJO highlights the range of price consolidation underway, the Inside period on Friday has closed in the “mid-range” of the Daily resistance level of 7216 and support of 6960. A breakout higher may be short lived as several resistance levels at 7216 and 7370 remain in play. The previous low of 6758 seems the preferred target in this slowing momentum environment.
Last week the S&P 500 set a very strong range week from the key support level of 4200. The a, b, c retracement is now complete as price breaks higher from this now bullish flag pattern. Follow through is now critical to maintain confidence in this initial move and arrest the primary down trend in place, a higher swing low and new high are required to satisfy the trending requirement. Several resistance levels remain at 4545 and 4720.
Price movements are considered positive with a reading above the 50 level, with this continued reading swinging from below the 50 level the Index has improved momentum and should be monitored for a further move over the 50 level. The potential for an accelerated move higher remains as momentum continues to the upside.
Comments from last week: The current closing low in the S&P is sitting on a key support level at 4200. The recent bullish a, b, c movement (marked) may be negated with a further decline below the key support of 4200. The S&P 500 meets the requirements of lower highs and lower lows setting a Primary down trend. As with other indices a sharp price rally on positive news may be short lived with resistance levels now building at 4320 and 4545. The next key level of support is 4050.
The pivot and 3 Bar reversal pattern resulted in a sustained move higher solidly closing over the Daily resistance level of 4420. The close above the short down trend line is significant and sets up a further move higher. As with all sharp rallies profit taking can be swift, in this event the 4420 level should be viewed as first support. However the recent series of higher lows along the new trendline shows buyers in the market and a significant short cover underway.
Relative Strength Indicator (14) has turned sharply higher above the key 50 level. A continued higher close above the 50 level would alert traders to further increasing price momentum. The breakout from the overall decline in the Relative Strength from November 2021 is notable as the failure to achieve a reading above the 50 level during this period only reflected the underlying market sentiment at the time.
Comments from last week: The OPd (outside period down close) on Friday with a close below daily support shown at 4220, sets a bearish view for this week. The current strong range down close bars last Monday and Friday indicate selling as the current risk off sentiment grows. Further price weakness will target the low of the Gap open reversal bar at 4114.
What a difference a week makes!
From full on downtrend to short corrective movement higher. Three low points from the original “gap open buy” signal late February complete the pattern with point “3” setting a pivot point prior to the current 3-day rally. The breakout from the down trendline is important, along with several overhead resistance levels remaining.
Relative Strength has turned higher and remains above the key 50 level, changing to positive price momentum on the 14 day look back period. The potential bullish divergence signal has played out with a swing BUY signal in place.
Comments from last week: The lowest close since May 2021 with last Friday’s “OPd” showing as the Nasdaq extends the Primary down trend already underway. The key to reading sentiment in this chart is the constant failure of Bullish reversal signals. Should a further close into the 1300 level occur the initial “Gap open buy” will be negated as the current downtrend continues to also extend the 5 wave down structure. A Bear market is now in play. The RSI “buy line” remains as an important level prior to the 50 level should market momentum reverse.
With price retracing back to the key $1916.40 level, Friday closed in not inspiring a further rally off this support level. A close below this level will target $1876.90 the original breakout level from Mid February 2022. Gold has a history of entering long consolidation periods following strong price rallies, this may be no different, traders could expect further consolidation in the coming weeks.
Price momentum has rolled lower, the indicator continuing to move below the 70 level will be the critical observation this week as a signal of continuing weakening price momentum may move below the 50 level.
Comments from last week: The Daily chart of Gold exhibits a blow off high, The immediate “pipe reversal” moving the price 4% lower from the high. The current retest of $1966.80 is underway with the hammer bar showing last Friday. The important early trade this week will be to hold the $1966.80 level as support. Historically the PM sector declines and consolidates (for months) following a strong advance, in the longer term view a retest of the breakout at $1876.90 is possible.
The retest of $27.00 complete, Silver remains within a large consolidation zone. Last Thursday’s retest of the $25.40 followed by Friday’s reversal bar has set a pivot point down. Follow through this week may see the $23.73 level and the $23.50 level remain in play for a retest. A significant change in sentiment would occur should the price rally back to the $27.00 level, this would force a short cover and potentially set up a breakout trade to $27.70.
Current Relative Strength is moving below the 70 level and now turning sideways shows price momentum is slowing in this retest of the $23.73 area. A continuing move below the 70 level and lower would be very bearish in the short term, and the potential for a further decline remains as price consolidates below the $25.40 level.
Comments from last week: With the retest of the $27.0 level complete with immediate price rejection back to again test the $25.40 level as support. The $25.40 level will be the key level to hold this week, the potential for a further decline to $23.73 is possible as short-term profits are taken. Silver has entered a Primary UP trend this consolidation area will be an important marker to hold as part of the Primary trend.
A rally in the $AUD coupled with a decline in the underlying $USD Gold price has forced the $AUD gold price back into the late February consolidation zone. However momentum has declined significantly with the real potential of a retest at the $2477 level underway. With the potential for the RB of A to lift interest rates in line with Global peers the underlying $AUD may remain strong and keep the $AUD Gold price in check at these current levels.
Relative Strength has turned lower from below the 70 level and moved below the key 50 level. With the loss of positive momentum, Relative Strength may continue to track sideways during any potential consolidation period.
Comments from last week: In line with the $USD Gold price and a currently stable $AUD at $0.73cents the $AUD Gold price has set a pipe reversal decline to retest the breakout level of $2712.0. This remains an important level to hold for the Australian Gold sector to remain bullish. Last Friday’s “hammer” bar shows buyers entering on price weakness with an important close above the $2712.0 level.
Last week saw the $4.50 level tested again with an immediate rally to close at the high of the week. This sets up the underlying trend to continue to retest the $4.90 level, a breakout higher would be significant in the current UP trend development.
Current reading has swung sharply higher above the 50-level reflecting the current momentum move underway. The key for now is the RSI remains above the 50 level as a reflection of ongoing and any positive underlying positive price momentum.
Comments from last week: Strong breakouts often lead to strong reversals to retest the initial breakout level, in this case a retest of the $4.60 to $4.50 level is underway. Price consolidation at this $4.50 level would be a bullish development for Copper to again retest the $4.90 high. Should a closing price move below the $4.50 level the critical level to hold is $4.33 the historical level of support. Copper has entered a Primary UP trend.
Last week saw underlying volatility decline sharply as markets price in some clarity around interest rates. Further declines in the XVI this week would provide a Bullish undertone for markets as future risk coverage is removed.
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: Forward pricing of PUT options remains on a high skew to current pricing. The market is paying the highest prices since Q4 2020 prices for forward protection. The outcome remains as Bearish pressure on local equities.
The USD has shown good support at the 2nd retest of the 97.75 level. This level is now critical to hold in the development of the current UP trend.
The Relative Strength has turned lower in line with price movements and should now be monitored for further strength as the current reading over the key 50 level should move higher, a further reading above the 70 level would indicate very strong positive price momentum. The short term outcome is to monitor this RSI for a move higher.
Comments from last week: The underlying Primary UP trend persists in the DXY daily chart. With the reversal moving to successfully retest the 97.75 level has set a bullish pivot on last Friday’s closing price, the further price target of 100.5 remains in play.
From the Gap open sell signal 2 weeks ago, the decline in price below the key psychological of $100 has quickly been arrested with a solid close towards the high of the range at $105.0. This is a bullish signal, for prices to remain strong in the short term. A further close over the $107.73 level would be a strong indication of further gains. Using a simple bar rule a close over the $136.0 high would set a further target towards $150.0bl. Only a price divergence in the RSI could alert traders to slowing momentum.
The current price strength has produced a new high in the RSI, this will again be monitored for a developing divergence signal, although it may take many weeks to develop. The Relative Strength crossing and remaining above the 70 level is not a signal of over brought as the reading can remain strong for many weeks.
Comments from last week: Recent market panic about Oil supply has pushed the front (March) contract to a high of $130.50, in doing so an opening price “Gap open sell” signal has been set. The current reversal bar has successfully tested and closed above the June 2014 breakout level of $107.73. The important level to hold is the $107.73 in this current week. This contract is in the expiry stages with the longer dated contact trading at a discount to the front contract. This week a break below the $107.73 level would be a bearish signal for a retest of $84.25.
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