Black and White Technical Report: The Week Beginning 08/06/2020

Price structure:

A strong follow on week from the initial “impulsive” away from resistance.
6430 remains the first real resistance level to overcome, to achieve this level solid price gains will be required from the  4 Pillar banks, WES, CSL and the large miners.

Indicator: Relative Strength
Relative Strength has moved over the key 50 level a signal of positive momentum, a continued reading over 50 would indicate bullish continuation.


Indicator: MACD
The first swing buy signal since Q1 2019, only shows how slow this indicator can be in reaction to sharp price movements. While not a crossover “swing buy signal” this should be monitored for confirmation of a continuation to higher prices. 

Black and White Technical Report: The Week Beginning 08/06/2020, FP Markets

Comments from last week: Weekly resistance at 5544 has been dramatically overcome with a large impulsive move. The closing price being more than 30% down from the high (5922) point of the range, will be of some concern to the short term traders.


Price structure:
A very strong trading week with each day making higher lows and higher highs until Friday set an Inside period ( IP ) as markets hesitated prior to the public holiday on Monday. Daily resistance is shown at 6248, a close above this level may indicate a short term exhaustion move, often strong momentum can lead to buyer exhaustion and profit taking.

Indicator: Relative Strength
RSI has moved above the key 50 and remains over the 70 level with last week’s sharp mid-week up turn rolling over. A loss of upward price momentum would see a return to the 70 level and warn the trader of potential further price weakness.

Indicator:  VOLUME
Recently daily volumes can be seen rising on down days with Volumes falling on UP days. This is typical Bear market activity.  This current breakout higher has been accompanied by high volume days, suggesting Buyers remain in control.

Black and White Technical Report: The Week Beginning 08/06/2020, FP Markets
Comments from last week: Following the breakout from 5535 the Daily XJO shows a pivot point rejection on Friday, this sets up a potential retest of the breakout level of 5535. To remain bullish the 5922 high of Thursday should be exceeded quickly for the buyers to remain in control.

Price structure:
The strong impulsive price move following the Gap open “sell” from 2 weeks ago has the potential to signal a “Blow off” exhaustion move. With the “GAP” at 3300 points insight, this area should be monitored for potential price reversal.

Indicator:  Relative Strength Indicator
Relative Strength turning higher from above the key 50 level last week is a sign of an increase in upward momentum, currently the turn higher is impressive, the RSI needs to remain above the key 50 level for current momentum to remain positive.

Black and White Technical Report: The Week Beginning 08/06/2020, FP Markets
Comments from last week
: The Weekly “V” shaped recovery has been completed with a “gap open sell” signal last week. This should be monitored for a further reversal to test the 2940 breakout. The OP from 3 week back is statistically still in play as they have a 1 to 3 bar warning of the high. (Krastins research)

Price structure:
Last week’s the developing “bearish” wedge set the tone for price weakness. This week the Friday breakout higher to test 3210 could be viewed as a significant “short cover” day. 

In the coming days follow through must occur quickly to avoid a loss of momentum bringing in more selling at the first sign of weakness. Friday remains a Gap open day. With these types of days often short-term profit taking will take place in the following days. 

Indicator: Relative Strength
RSI from last week’s bearish divergence intermittently turned higher, the signal line has rolled lower again as short-term bullish momentum has been lost. Without a further breakout higher look for a further bearish movement back to 50 in the coming week.

Black and White Technical Report: The Week Beginning 08/06/2020, FP Markets

Comments from last week:  Daily price movements continue to push higher above the key 3000 point level. The developing wedge will keep the bears on watch for a break lower in the coming days.

The short-range days are not a sign of strength with the overlapping ranges showing lack of commitment of the buyers.

Price structure:

The underlying price structure remains in a Primary UP trend.

Last week the “OPd” as a key reversal bar may lead to further price weakness, the range covering not only the previous week but the previous 7 weeks may shake the resolve of short term holders. $1610 set its self up as the first support level. It shows a potential short term top in place.


Indicator:  Relative Strength
The Relative Strength Indicator has failed to make a new high in line with the underlying price, an early sign of potential consolidation as the RSI tracks sideways. However, the indicator remains over the key 50 level a sign of positive price momentum, but as the trajectory steepens lower a cross of the 50 would only highlight the already lost upward momentum. 

Black and White Technical Report: The Week Beginning 08/06/2020, FP Markets
Comments from last week: The Weekly chart of Gold continues to consolidate below the $1747.00 level, while not an out right bearish pattern can be considered the April pennant breakout leading to price failure to follow through.

Price structure:
With the $AUD strength last week printing $0.70 and higher coupled with the key reversal in $USD Gold, the Chart of Gold in $AUD terms remains in a primary down trend and a full 11% from the highs. The $2380 is critical support to be monitored in the coming week.

Australian Gold stocks should be evaluated on an individual basis, this relative price weakness will flow through to the AUD miners price performance.  

Indicator:  Relative Strength
A sign of overall loss of positive momentum when the RSI falls below the 50 level. The RSI below 30 is now indicating very weak price momentum. The long overall decline is of concern.

Black and White Technical Report: The Week Beginning 08/06/2020, FP Markets

Comments from last week: A warning for Australian Gold stocks, while they responded strongly to the USD Gold price may be in for a reality check as the AUDXAU price falls back to the long term trend line. Traders would look for this to hold in the coming week, to maintain a bullish view of Australian Goldies.


Price structure:
The daily chart of Silver shows the potential Bullish flag forming. It is concerning the current closing price is lower than the previous HH point. This is not a sign of price strength.

Only a breakout over the recent high at the $18.50 resistance level in the coming 2 or 3 days would set this up for further gains. 

Silver is an Industrial metal and will be responsive to improving economic news.

Indicator: Relative Strength
The Relative Strength Indicator has now posted a “swing sell” signal following the divergence from price, a further move towards the 50 level would be in line with falling price, and a potential retest of the $16.50 level.

Black and White Technical Report: The Week Beginning 08/06/2020, FP Markets

Comments from last week: The Daily chart of Silver maintains the Primary move with a final impulsive move on Friday. The retest of $16.50 is complete with the metal looking to test the FO (Fake Out) high from February. (See RSI note)

Current volatility levels remain the 2nd highest since the GFC. The recent statistics around flattening the curve had allowed this Volatility measure to retrace lower.

It should concern traders the Volatility remains at elevated levels while the equities market is in a bullish phase, clearly the expectation of future price weakness is being priced in.

And although the reading is lower this week, the most important observation is the value has maintained a relatively high reading currently at 20.7, reminding the trader this indicator has the potential to move higher in the next week. A bearish signal.

The XVI is the difference of 1 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.   

An XVI over “13” is generally bearish for equities.

Black and White Technical Report: The Week Beginning 08/06/2020, FP Markets

Price structure:
Significant weakness within the USD Index with Thursday posting an OPd period, the completion of the a,b,c move may be near. Friday’s positive close may be viewed as end of week “short cover”. Monday’s trade has the potential to show the next direction. Any price gains may use the 98.45 level as resistance.

Indicator:  Relative Strength
The  RSI has won the day, as it tracked below the key 50 level showing weak momentum that has followed through in to lower prices. This can now be monitored for a potential Bullish divergence reversal setup.

Black and White Technical Report: The Week Beginning 08/06/2020, FP Markets

Comments from last week:  USD Index staged a surprise move lower this week following the expectation of a retest of 101. The breakdown below 98.45 is significant, Fridays hammer bar requires an immediate follow through to confirm the completion of the a, b, c price movement.


Price structure:
This commodity is news driven
Upward price momentum continues without abatement. The $42 level will be the key “test” in the coming week. Last week strong range with a high close is setting the bullish tone for further gains.


Indicator: Relative Strength
The developed picture in the RSI is a Bullish divergence Buy signal, a weekly cross of the 30 level has now confirmed. The key 50 level has now been crossed as a sign of increasing momentum. 

Black and White Technical Report: The Week Beginning 08/06/2020, FP Markets

Comments from last week:     Traders should be reminded that WTI remains in an overall Primary down trend. The current price test of the lower side of the GAP is a good short term signal of price strength. A better signal would be a close over the $40 level and successful test of the $42.0 support / resistance level, followed by a shortbretracement to see if sellers exist.

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Source - database | Page ID - 21417

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