Black and White Technical Report: The Week Beginning 10/05/2020

Major Indices S&P 500 (and DOW30) the XJO200 have reached the nadir of resistance levels, with the Bullish sentiment failing. Without hesitation the Nasdaq makes a move within 500 points towards the all-time high. Tech stocks are flying. With underlying QE in the US and now Australia, I would not discount a developing blow off top in the coming months within the majors.

Silver posts a breakout day from recent consolidation, with Gold showing a continuation pattern, the metals will garner interest in the coming week.

I have included Australian Dollar Gold, currently showing rejection of higher price as the AUD strengthens. This may put the local producers into further price consolidation.

Price structure:

With consistent rejection at the 5544 level, last week’s range has failed to re-test this important level. The weekly bar completed on “low” volume although closing on the high, immediate follow through is required to remain bullish.
A closing high towards 5544 or higher would be a very bullish signal for further gains.

Indicator: Relative Strength
Relative Strength remains benign below the key level of 50, indicating low positive momentum, should the index test 5544, a reading over 50 may indicate bullish continuation.

Indicator: VOLUME
Close inspection of the Volume will show higher volume on the down weeks and lower volume on the positive weeks.

Black and White Technical Report: The Week Beginning 10/05/2020, FP Markets

Comments from last week: Last week, the retest of 5544 points was met with immediate rejection. The current wedge pattern is at risk breaking down to test the 4765 level. This secondary market movement that has developed from the March lows is beginning to confirm the corrective movement into a Primary down trend.


XJO DAILY   Price structure
Small range days remain uninspiring for a potential breakout, the risk for a retest of 5100 is growing with each day that fails below the Daily resistance level of 5535.


Indicator:  Relative Strength
RSI has moved above the key 50 level and turned sideways as the loss of upward momentum comes to a halt in this consolidation.


Indicator:  VOLUME
The recent daily volumes can be seen rising on down days with Volumes falling on UP days. This is typical Bear market activity as the overall volume dries up as the market reaches resistance. Friday’s positive close on relative high volume, is unusual and should be treated with suspicion as Friday closed off the high of the day.

Black and White Technical Report: The Week Beginning 10/05/2020, FP Markets

Comments from last week: The daily chart shows the tepid price movements to retest the Daily resistance at 5535 level. With the current engulfing range having a larger range than recent price action the potential for a follow through is very high.


Price structure:
The developing bearish wedge is at risk of failure as the week closes in on the high of the rejection shooting star. Resistance at 2873 will remain the key level this week. A continued expansionary move higher places the Index at risk of a blow off top should the “fake out” high be exceeded.

Indicator:  Relative Strength Indicator
Relative Strength turning higher from below the key 50 level is a sign for the Bullish.

Black and White Technical Report: The Week Beginning 10/05/2020, FP Markets

Comments from last week: With resistance at 2873, last week’s “shooting star” is a warning as it follows the previous week #3 type candle (see Haguro method notes) also a warning of reversal. This pattern is at breakdown point, with a potential retest of the lows of 2200. This type of BEAR Market rally can end as quickly as it developed.

Price structure:
The daily S&P now contains two bearish flag patterns, Fridays “gap open” is a short term bearish signal that should show up early this week. Daily trend is UP (weekly undefined) however a potential breakdown below 2800 would be a bearish signal.

Indicator: Relative Strength
RSI from last week’s bearish divergence intermittently turned higher, the signal line has rolled lower as bullish momentum has been lost. Without a breakout over 2940 points look for a further move below 50 in the coming week.

Black and White Technical Report: The Week Beginning 10/05/2020, FP Markets
Comments from last week: Last week the developing bearish flag has broken to the downside of the pattern and closed on the lows of the day. Further weakness would be expected in the coming days. Traders would look for expanded daily price ranges in the coming week. Price projection suggest the index may move to 1800, although this may take many months to develop.

Price structure:

The underlying price structure remains in a Primary UP trend.
This Weekly “pennant” pattern is a strong signal for continuation within the primary UP trend. The two inside periods show an indecision pattern. Should price breakdown the $1610.90 would be the potential retest level.


Indicator: Relative Strength
The Relative Strength Indicator has failed to make a new high in line with the underlying price making a new high, an early sign of slowing momentum. Last week the RSI showed further weakness, this would be monitored for a close below the key “50” level.

Black and White Technical Report: The Week Beginning 10/05/2020, FP Markets

Comments from last week: The Weekly inside period ( down close ) shows the developing consolidation, the key level of $1700 is to be watched for further resistance, failure at this level would put the $1610.00 level in play for a retest in the coming week.

Price structure
Many Australian miners do business in $AUD the Australian dollar Gold price can determine the day to day performance of these ASX listed miners. A rising $AUD will weaken the AUD XAU gold price.

The Daily chart of AUDXAU shows the 3-spike high in place followed by a solid move below $2650. The current decline is a measured Bullish flag pattern, however further weakness may see the long-term trend line tested.

Should USD Gold move lower this broad top will be viewed as a distribution pattern.

Indicator:  Relative Strength
A sign of overall positive momentum when the RSI remains below the 50 level. The RSI is working its way lower in line with the loss of upward momentum as the broad top develops.

Black and White Technical Report: The Week Beginning 10/05/2020, FP Markets

Comments from last week: Friday’s IP (inside period) a signal of indecision as price approaches the previous weeks highs, the risk is a double top playing out into lower prices. First lower level to test is $1684 followed by $1631. While Gold remains in a Primary UP trend them risk of short term profit taking is showing in slowing price momentum.

Price structure:
The daily chart of silver shows the Bullish move last Thursday, this was not followed thru on Friday and may result in further consolidation above the developing $14.75 support level. Traders would look for a further closing high above $16.00 as confirmation of underlying buyer demand.

Indicator: Relative Strength
The Relative Strength has turned sharply higher, from below the 50 level. This should be monitored in the coming days for a move higher in-line with further Bullish price movements, a further move below the 50 level would be in line with falling price.

Black and White Technical Report: The Week Beginning 10/05/2020, FP Markets
Comments from last week: The Weekly Chart of Silver remains above the $14.75 level as the Bullish flag pattern breaks down and price moves sideways. The Silver Chart remains benign, this is not a Bullish picture as confirmation for the Gold Chart. $16.50 remains the preferred upside target, however the current consolidation is “weak”.


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.

2 weeks ago the level began to rise in line with loss of Bullish sentiment in the equities market.

And although the reading is lower this week, the most important observation is the value has maintained a relatively high reading currently at 27, reminding the trader this indicator has the potential to move higher in the next week. 

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 10/05/2020, FP Markets

Price structure:
Simple channel development underway, the “hammer” bar from last Friday remains a bullish signal for a retest of the 101-resistance level in the coming days.

No defined trend is in place as this range consolidation takes place.

Indicator: Relative Strength
Relative Strength had remained just above the 50 level, however the sideways movement is a continuing sign of weak momentum as the indicator turns lower.

Black and White Technical Report: The Week Beginning 10/05/2020, FP Markets

Comments from last week:  Last week’s retest of the 98.45 level finished with a “hammer” candle; this bullish sign at the current support level suggests a retest of the highs. However the RSI remains below the 50 level, a sign of weak price momentum.

Price structure: This commodity is news driven.
WTI continues to recover from the supply settlement debacle of 2 weeks ago. The “pivot bar” of last week has followed through. However the $20 resistance level remains a barrier in the short term. 

Expect consolidation below this level in the coming days.

Indicator: Relative Strength
The developing picture in the RSI is a Bullish divergence Buy signal, a weekly cross of the 30 level has now confirmed. This should be monitored for further progress over the key 50 level.

Black and White Technical Report: The Week Beginning 10/05/2020, FP Markets
Comments from last week:
  Following the wash out of last week’s expiry debacle the WTI continuous contract has gained some composure as the Bullish “pivot bar” is now in place. A retest of $29.20 is the current target for traders. But be reminded the PRIMARY Trend is DOWN.

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