The Nasdaq has staged a Bear Market corrective move that may ultimately show as an exhaustion move. Considerable price development is required to satisfy the Buyers. The market is indeed ready to move higher.
The local XJO200 moved higher last week, albeit on relatively low volumes for the week. This volume profile needs to improve to underpin the Bullish moves.
Gold and Silver again remain under pricing pressure and risk further consolidation at these current levels.
The outcome for local producers remains weak on the back of a stronger $AUD.
The West Texas Oil contract is moving back to retest the $136.00 high levels with a bullish pivot set last week.
Last week saw the follow on from the earlier Pivot bar reversal. The weekly range is short by comparison to recent price ranges, however the close is towards the high. Identified as a Fake out having crossed the previous Spike high point, the close above this level is important for further movement higher. This week may see the continued move higher, a close over the 7530 will be an important observation. Price failure to reach this level will give an indication the current to move is a Bear Market rally.
Relatives continue higher and close over the key 50 level. Price momentum remains positive. As the Relative Strength Indicator reflects price momentum the current weekly closing price display increasing positive price momentum.
Comments from last week: 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.
Last week saw 4 Daily higher closes, with Friday showing a small rejection range from the high. The 7370 area is an important support level to hold in the coming days. Overall, the daily advances are becoming shorter from the strong rally 2 weeks ago, not a great signal for immediate continuation.
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 above the 70 level will provide a signal of strong price momentum.
Trading volumes have been relatively low during the past week leading to Friday’s close, volume will be monitored for any further decrease as a signal of buyers unwilling to enter the market. Strong volumes towards the 1B + level will indicate institutional buyers in the market.
Comments from last week: 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 S&P 500 has reached the 4545 – inflexion point, a move higher from this level would be an important development in the continuation of the overall UP trend. The current breakout following the a, b, c decline may be the Bear Market rally that often shows in the early development of tops. This Weekly chart will be monitored for a Weekly reversal signal in the coming weeks.
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: 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.
The Daily chart of the S&P 500 offers a very bullish picture following the Wednesday down close bar attempting to retest the 4420 level. The current move over the high of that bar (pivot reversal) is a very strong bullish signal. However the 4545 level is key for the coming week, a close over this level would confirm the Buyers are in control.
Relative Strength Indicator (14) has again 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 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.
The continuing strong advance in the Nasdaq has also overcome last Wednesday’s price resistance at the 14535 level. With the current price moving over the last high point set in the first week of March, the move is considered “corrective”. To confirm a trend, a retracement to set a higher low and price to follow on to set a new high is required, until then this is a corrective move.
Relative Strength has turned higher to sideways but remains above the key 50 level, changing to positive price momentum on the 14 day look back period.
Comments from last week: 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.
To see a Bull market, develop from the recent “flush” higher over USD$2000 the current resistance of $1966 should be broken decisively. Last Thursday and Friday saw two failed attempts at moving over this level. Currently Buyers are providing support at USD$1916.40 with Sellers at USD$1966.80 hardly Bull market price action. Until a price breakdown below the 16/03/2022 low of $1894.70 USD Gold remains within a primary UP trend.
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: 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.
Silver seems to be stronger than the Gold / Silver pair with price initially closing over the $25.40 followed by the current retest last Friday. A follow through to test the high at $27.0 would confirm a bullish outlook. USD Silver has buyers at the $23.73 level with sellers at $25.40. Silver remained within a large consolidation zone and importantly did not retest anywhere near the all-time high in line with Gold during the March rally.
Current Relative Strength is moving above the 50 level and now turning higher shows price momentum is increasing in this retest of the $25.40 area. A continuing move above the 50 level and higher would be very bullish in the short term, and the potential for a further rally remains as price consolidates at the $25.40 level.
Comments from last week: 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 $25.40 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.
A stronger $AUD has placed pressure on the $AUD XAU price. The key support is $2541.0 with last week setting a 3-bar reversal pattern. For this to play out an Increase in the USD Gold price is required or a decline in the AUD$. Currently the view is for consolidation above $2541.0 based on the USD Gold price consolidating.
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: 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.
An important distinction to observe in the Commodities space, given Copper is in short supply ( but not largely supplied by Russia) , price has remained relatively stable during this metals supply crisis. Currently with support shown at $4.50, and the failed retest of the $4.90 high consolidation at these levels is developing with a further retest of $4.50 in the coming week.
Current reading has swung sideways above the 50-level reflecting the current consolidation 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: 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.
Last week saw underlying volatility again decline sharply as markets price in some clarity around interest rates and the Ukraine war. 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 bear flag developing above the 97.75 level has the potential to target a retest of the 96.93 level in the coming week. The USD is capable of trading within a range over extended periods; this has the potential to do just that.
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 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 west Texas contract has set a new Bullish Pivot bar in line with the Primary up trend already in place. The potential is to retest the highs over $136.00. The closing high price set at $115.68 may provide resistance on the way through. Should price rejection occur at these levels the breakout level of $93.53 (already tested two weeks ago) will again be the level to hold.
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: 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.
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