Black and White Technical Report: The Week Beginning 01/11/2021

Markets have reacted well to the current US reporting season’s results, with all US indices setting new all-time highs.

The Australian XJO continues to display a broadening top formation with the risk of breaking down to test lower price levels, unless the last August 2021 highs are met and exceeded.


Gold and Silver’s price action remains subdued. Silver put in a better performance with further consolidation in the price of Gold, both maintaining a bullish outlook.


Price structure:
The small range bars mentioned last week have succumbed to price weakness, as the buyers have been unwilling to enter the market as the price approached the 7530 level. The OPd (outside period down close) has closed on the short term tentative trendline. This week a close above the 7530 level would be important for the Bulls, however the OPd is a reversal signal, the first downside target is shown at 7197/7200 area with the risk of a breakdown to test 6900. This will be confirmed should the market close below 7180, with a confirmed down trend in place.

Currently the underlying primary trend remains UP, but at risk of changing to Down.

Indicator: Relative Strength 14
Relative Strength has turned lower, as the reading is above the 50 level, the next move in the RSI will be telling should it move below the 50 level. For overall market strength or weakness.

The Relative Strength Indicator reflects price momentum.

The RSI should be monitored for a continued move above the key level of 50 to show a shift to bullish price momentum. 

Black and White Technical Report: The Week Beginning 01/11/2021, FP Markets
Comments from last week: 
 With the Index moving off the 7200 area of support the Weekly range high to low remains small and indecisive. The 7530 level is the next major resistance level to cross, failure before this level would give a Bearish signal. Primary trend reversal will be complete should the market close below the 7180 level. In the coming weeks 7200 will remain a key support with 7632.0 as major resistance.

Price structure:
One important observation in the Daily chart is the large sell down days do not follow through into lower prices. The Market high was set during August 2021, there has been too much time taken to move above this high. The past weeks I have mentioned the possibility of a major top pattern that is developing from June 2021, playing out into lower prices.


Indicator: Relative Strength 14
The RSI has moved sharply below the important 50 level.  In the short term a continued move below the 50 level would be Bearish and would send a strong signal to short term traders of a top in place.


Indicator: VOLUME
Trading volumes have remained benign on the rising price structure; this is not a great signal for the Bullish.

Black and White Technical Report: The Week Beginning 01/11/2021, FP Markets

Comments from last week:  The Daily chart shows the importance of the 7430 level with clear rejection for the last 3 trading days of the week. The open and close of Thursday and Friday remain very tight as the market reaches this balance point. The bigger picture risk is the Index fails to take out the higher resistance levels of 7530 and 7632, if this longer-term (many months) scenario plays out the whole price picture from June 2021 onward may be a very broad topping pattern.


Price structure:
The S&P 500 remains very bullish for further gains; in the interim following 4 weeks of gains some consolidation would be expected. The ES Futures contract closed at the high value of 4600 on Saturday morning. This would lead to the expectation of a strong opening today. The bearish wedge (red) breakdown has not followed through lower with a new high being made. The S&P may be forming a price channel with 5000 as the high side target. 


Indicator: Relative Strength Indicator 14
A signal of increasing momentum as the Relative Strength Indicator (14) turns higher on the 3rd of  large range price movements of last week and the weeks prior. The Relative Strength Indicator is in a good place for further strength, a movement over the 70 level would indicate strong price momentum. Historically the indicator can remain over the 70 level for an extended period of time as seen during July – September. 

Black and White Technical Report: The Week Beginning 01/11/2021, FP Markets

Comments from last week: The S&P has set a great technical signal for higher prices with the close of last week towards the high and setting an all-time high closing price.  The NYSE also set a new all-time high. On a cautionary note, with the market at the highs, profit taking may take place. Should the market retrace, the first level of support remains at 4320.


Price structure:
Last Wednesday provided the retest of the breakout at 4547. Last Thursday resetting a new pivot point reversal, with Friday confirming the pattern. The lows from September to the 4547 level offer the projected price target of 4850 in the immediate term. The 4547 level is now critical to hold should profit taking see sellers enter with volume.


Indicator: Relative Strength 14
The Relative Strength Indicator (14) has turned higher over the 50 level, a signal of underlying positive price momentum, a further movement over 70 would indicate further strong price momentum.  A close below the 50 level would alert traders to failing upward price momentum.

Black and White Technical Report: The Week Beginning 01/11/2021, FP Markets

Comments from last week:  The cautionary note in the Weekly chart comes from the Daily observation of an OP (outside period) set on Friday. This type of range has a statistical significance of marking market turning points. The past week is showing several “gaps”, a price decline from this level would be looking to fill the gaps for a potential retest of the Trendline. The S&P has made an extended price movement; this type of 8 day price gain is subject to short term profit taking.

Price structure:
The Nasdaq daily offers a very similar breakout pattern to the S&P, however the Nasdaq has set an outside period up close; this is often seen as the high point (within 3 bars) following a strong price movement. The continuing support level remains at 15534 as this was the level of the last retest. With support at 14535 and resistance of 15600, the chart offers a further 1000 point extension of price from these levels to 16600. In the event of a price retracement the price gap at 14765 remains open as a potential retest of this level may also test the long term “tentative” trendline.

“Tentative” trend lines only have 2 points of contact.

Indicator: Relative Strength 14
Relative Strength Indicator moving over the 50 level is a strong sign of improving price momentum, with the 70 level and higher a possibility and an indication of strong price momentum. 

Black and White Technical Report: The Week Beginning 01/11/2021, FP Markets

Comments from last week: The chart of the Nasdaq is of concern, the first observation is the potential “lower high” coming into place below the 15534 level. The first level of support during any price retracement is 15184 followed by the 14765 level intersecting the Trendline. The broader observation is the Nasdaq is setting a broad topping pattern beginning from the month of July. The broader risk is a follow-on with other Indices as many Nasdaq equities are weighted into the S&P 500.

USD Spot GOLD – DAILY     
Price structure: No evidence of a Bull market.
The price level of $1788 remains the main consolidation level as Gold swings between support of $1725.0 and resistance of $1834.0. The current consolidation along the down trendline can be a precursor to bullish price action. The recent price rejection at $1800 has held the short up trendline, leaving Gold at a good point for further upside price action.

Indicator:  Relative Strength 14
Relative Strength has recovered and is moving above the 50 level, potentially heading back to the 70 level, a signal of increasing price momentum with the sharp move higher and should again be monitored for a further move higher. 

Black and White Technical Report: The Week Beginning 01/11/2021, FP Markets

Comments from last week: Gold had a great week following the potential for a follow through from the impulsive move of 2 weeks ago. The current test and rejection of the down trendline with a close below the key $1800 level shows the buyers unable to hold the momentum move. Consolidation above the $1764.30 level would be very bullish for a further move higher in the coming weeks.


Price structure:
The daily chart of silver provides good price structure for further upside following the “shooting star” mentioned last week. The rejection pattern is trading in a secondary consolidation, setting a Bullish flag. With a price breakout above $24.90 resistance Silver will have completed a major base and potentially enter into a Primary UP trend. Some lofty targets are being thrown around by commentators, but the reality is Silver remains within a large trading range between $21.60 and $30.0. A breakout over the $24.90 level would offer the next resistance level of $27.00 as the target.


Indicator:  Relative Strength 14
Current Relative Strength is declining in line with the current price momentum slowing. 

Black and White Technical Report: The Week Beginning 01/11/2021, FP Markets

Comments from last week: The Daily chart of Silver highlights the strong momentum move higher from the down trendline breakout. Last Friday’s rejection candle (shooting Star) is a clear rejection of the previous high at $24.90.  This week may see further profit taking; however, a breakout higher again would be a VERY bullish signal for the retest of $25.52 and higher. Silver has set a corrective move higher in a down trend, for a trend to be confirmed a retracement must take place before a 2nd move higher.


Price structure:
On a strengthening $AUD, the Australian dollar Gold price continues to be suppressed lower as the Primary Metal also further consolidates (around $1800.0).

$2328.0 remains as the first support level in this ongoing decline in price. Price action in the local miners remains positive in the face of a strengthening $AUD, traders would look for price retracements in the producers on this XAUAUD price decline. 

Indicator: Relative Strength 14
Relative Strength moving back below the 50 level is in line with consolidating price movements. Price momentum has again turned flat to negative, a further rise in price will see the RSI move over the important 50 level.

Black and White Technical Report: The Week Beginning 01/11/2021, FP Markets

Comments from last week: The XAU in AUD terms has closed on $2400, a key level to hold to be psychologically bullish. This long Secondary type of price movement can be the precursor to a sustained breakout. The down trendline is the first level for price to cross to confirm a bullish outlook. This remains a positive for local Gold producers NCM, NST and SLR. The smaller players will remain news dependant.


Price structure:
With the rejection of the $4.80 high continuing, current price action is again testing the key support resistance level of $4.33. The current technical expectation is for the metal to retest the long term trendline meeting at $4.20. This level is also the closing price support area of the past 9 months. Copper so far remains bullish, but price consolidation can take many months to resolve. This type of price action offers many trading opportunities both long and short.


Indicator: Relative Strength 14
Following the sharp turn lower in the RSI is a reflection of the sharp price movement. Current readings are not a good signal for further immediate momentum gains. The key for now is the RSI remains above the 50 level as a reflection of ongoing and positive underlying price momentum.

Black and White Technical Report: The Week Beginning 01/11/2021, FP Markets

Comments from last week: The Gap open from the Friday close to the Monday open has met with immediate selling; last week’s comments mentioned the risk of selling following a euphoric price move. The price moving back to test the $4.50 level has set a Dark Cloud price structure and the commodity may see further selling in the coming week. Further price weakness may retest the key $4.33 level.

The whole price structure in January 2021 is consolidation between $4.00 and the current 2nd retest of the all-time high of $4.80.


Price volatility is rising in the forward ETO options market, inferring the cost of protection is rising on demand.

While not extreme at this 12.80 level, a move over the 13 level will remain a bearish signal for Australian top 200 equities.

The XVI is the difference of 1–3-month forward pricing of ETO Options against the 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 of the underlying market.   

Black and White Technical Report: The Week Beginning 01/11/2021, FP Markets

Comments from last week: With the Volatility in decline, equities have maintained a positive bias. News around the Evergrande saga has the potential to change this.


Price structure:
The impulsive price movement from the UP trendline is in line with the longer term underlying UP trend = very bullish for further gains

This is a very strong signal for further gains; a closing price over the 94.70 would complete the major base pattern spanning the past 12 months.

The key level to hold in the coming days is the 93.45 support.

An up trendline is now in place.


Indicator:  Relative Strength 14
Relative Strength has turned higher in line with price movements and momentum. And has the potential to move higher on further price strength while above the 50 level.

Black and White Technical Report: The Week Beginning 01/11/2021, FP Markets

Comments from last week:  The bearish divergence signal of 2 weeks ago has played out into lower prices. The current retest of the 93.45 level shows the Index in consolidation from the highs of 94.0.

The overall longer-term trend is up, this would now be monitored for support at these levels with the potential to retest the highs at 94.70 in play.

Price structure:  This commodity is news driven by supply -demand.
The WTI contract has had a great run from the breakout of $75.20. Last week’s OP (outside period) may be the short term top marker for a retest of $75.20. The confluence of the Trendline and the potential support level of $75.20 continues to offer a very bullish long term picture of the WTI contract. 


Indicator: Relative Strength 14
RSI has set a sharp reversal to move over the 50 level and now the 70 level. Close inspection shows the indicator “rolling” sideways putting the longs on alert of slowing momentum.

Black and White Technical Report: The Week Beginning 01/11/2021, FP Markets

Comments from last week: The Weekly chart of the West Texas contract has now entered into an extended move. This type of continuous price gain can be subject to profit taking. Any price weakness should be monitored for a retest of the KEY $75.20 level, this must hold to remain bullish for the longer term. The underlying Primary trend for the contract remains UP.

Oil $100.

Start Trading
in Minutes

bullet Access 10,000+ financial instruments
bullet Auto open & close positions
bullet News & economic calendar
bullet Technical indicators & charts
bullet Many more tools included

By supplying your email you agree to FP Markets privacy policy and receive future marketing materials from FP Markets. You can unsubscribe at any time.

Source - cache | Page ID - 21397

Get instant Updates in Telegram