Black and White Technical Report: The Week Beginning 12/07/2021

The past week has been marked with many social media commentators calling the top in markets. However, there is no evidence of reversal price patterns or significant Relative Strength weakness. With the DOW30, S&P 500 and the Nasdaq pushing to an all-time high again, the market seems quite resilient to negative commentary.

The July period often marks a seasonal bullish phase for indice’s.

The Gold and Silver price continues to consolidate around important support zones, while no primary movement is underway, both remain well supported at current levels.


Price structure:
Another week of consolidation in the XJO, for long term holders this type of price movement is often the precursor to higher prices, as the underlying Primary trend is UP, the current secondary consolidation is a part of that trend function.

The support level shown at 7197 remains in place as does the price target of 7715. 

To achieve this level and higher the underlying 4 banks, particularly CBA along with the larger weighted equities WES, WOW, APT, CSL must continue to hold support and to push higher.

The current confirmed trendline ( 3 touches) remains intact with last week closing on the line.


Indicator: Relative Strength 14
The RSI indicator has turned sideways and moved below the 70 level. A further reading under the 70 level would put traders on alert for some form of slowing divergence signal.

During time of consolidation the RSI will normally decline as price moves sideways.

The RSI should be monitored for a potential move below the key level of 50 to show a shift in price momentum.

Black and White Technical Report: The Week Beginning 12/07/2021, FP Markets

Comments from last week:  The XJO registered an Inside range last week as the market remains in balance, so while the market has not made a new high it is important to acknowledge some important observations. The 7197 level has held as support, the price is developing along what was a tentative trendline, now a confirmed trendline. The short term price target of 7715 remains in play as price has not shown a real reversal signal in this consolidation area.


Price structure:
The Daily chart of the XJO clearly displays a developing consolidation between 7406 and 7216. The structure of this pattern is almost complete with Two identified low points and the third to be confirmed.

Today is expected to be positive, this would confirm the 3rd low point and current retest of the 7216 level.

This week look for a closing price above 7381 as the first signal of a potential breakout higher.


Indicator:  Relative Strength 14
As price consolidates above the 7216 level relative strength will not provide a tradeable signal until we see a price breakout either side of the current range.

February and March 2021 show a similar RSI pattern  prior to the higher breakout.


Indicator:  VOLUME
Trading volumes again remain robust during the later part of the week indicating accumulation rather than distribution.

Black and White Technical Report: The Week Beginning 12/07/2021, FP Markets

Comments from last week:  While the Weekly chart shows simple consolidation, the Daily chart shows the detail within that consolidation, currently the Daily chart is developing a continuation pennant pattern, Last Friday’s engulfing bar shows as a good signal of price support. With the RSI now moving back over the key 50 level, price momentum is again positive, this level should be monitored in the short term as price tests current support levels. While consolidation takes place the Relative strength can swing higher and lower. Traders would wait for the technical price pattern and the RSI to confirm direction.


Price structure:
The new support level of 4240 is now confirmed as the lower shadow of last week’s bar attempted to retest this level. Currently no evidence of a topping pattern or weak price structure is in place. The Primary breakout is underway, traders would monitor the 4240 level for an early warning of potential Trend failure.


Indicator:  Relative Strength Indicator 14
The Relative Strength Indicator had moved to a divergence sell signal, this has now failed with the new high reading over the 70 level. The RSI reading remains strong and consistent with the current price breakout underway.

Black and White Technical Report: The Week Beginning 12/07/2021, FP Markets
Comments from last week
: The S&P has set a “Primary move” last week as the price action begins to show a directional move. (not overlapping previous bars) This is a good signal for further continuation. Reversal would take the form of a single key reversal bar (overlapping ) or a corrective price movement below 4150. The price range of 2 weeks ago was strong, last week may also be regarded as strong with a minimal lower shadow for the week.


Price structure:
With a new high price showing in the Daily chart following last Thursday’s retest of the developing trendline. Friday’s pivot point bar is also a large price range bar and often an indicative signal for further gains. The defined resistance / support level of 4240  will be the key level to hold should the market fail to continue the current breakout momentum.


Indicator: Relative Strength 14
This indicator is now being monitored for a divergence sell signal with a first swing below 70 following the high set on Tuesday – Wednesday last week. The current reading of the RSI is lower as the price makes a new high, an early indication of Bearish divergence underway. 

Black and White Technical Report: The Week Beginning 12/07/2021, FP Markets
Comments from last week: 
 Last Friday’s impulsive price movement has taken the index back over the extended long term trendline (now invalid) on an extended price bar (Friday). Traders should monitor this event for a possible exhaustion move when read with the RSI notes below. With an extended move of 10 days higher highs and higher lows, profit taking may be swift taking the market back to test the 4230 level. Currently there is no evidence of a top formation, only the potential for short term exhaustion.


USD Spot GOLD – DAILY     
Price structure:
The Daily Gold chart is showing a secondary consolidation pattern that can be a bullish pattern with a breakout higher or a bearish pattern with a breakout lower. Price momentum is increasingly positive (see RSI note). Inspection of each daily bar shows an indecisive market, until a momentum move is made further consolidation may persist. 


Indicator:  Relative Strength 14
The RSI positive divergence pattern from 2 weeks ago has played out. Relative strength has now moved back to the 50 level, a signal of increasing positive price momentum and should be monitored for a further move higher.

Black and White Technical Report: The Week Beginning 12/07/2021, FP Markets

Comments from Last week: The long term support level of $1764.30 was tested and broken during the past week. What is important to observe is the price also broke below the low (HL) set at the end of April and quickly recovered higher over $1764.30 support/ resistance level. A very good short term bullish signal for buyers with a potential retest of $1863.66 underway.


Price structure:
$26.00 remains the key support resistance level for Silver. The price consolidation area has narrowed with resistance at $27.00 and support shown at $25.52. The past week has developed into a Bullish Flag, although inside the consolidation area the breakout higher should test $27.00 as first point of resistance.


Indicator:  Relative Strength 14
In the shorter term observation, the RSI last week shows a move below the 50 level as price continues to consolidate.

Black and White Technical Report: The Week Beginning 12/07/2021, FP Markets

Comments from last week: In line with Gold, Silver also made a new low and set a fake out bat, but the chart remains structurally stronger than its Gold counterpart. Look for the resistance level of $27.00 to be tested in the coming week as Silver makes another attempt to break out of the long term consolidation between $24.60 and $28.40.


Price structure:
With a price rally underway, AUDXAU has again moved over the important level of $2400 as thew “shooting star” shown 2 weeks ago has failed. (Bullish signal) 

The broader picture shows the recent Higher low is now set, a follow-on breakout higher over the  2477.0 level would set a very positive tone for the Australian listed Gold producers.


Indicator:  Relative Strength 14
Relative Strength moving back over the key 50 level is a positive for price momentum. 

Black and White Technical Report: The Week Beginning 12/07/2021, FP Markets
Comments from last week: 
 Last week saw a good test and hold for the AUDXAU price. Last Fridays Shooting star may be the setup for retesting this short-term support at 2332.0. With the potential for an extended move higher in US$ Gold, the outlook for the AUDXAU value remains positive. This should flow through to higher prices in the Australian listed Gold producers.


Price structure:  LME Inventories remain historically low as the Chinese release stockpiled product.
The current price of Copper ($4.35) remains trapped at the Midpoint resistance level of $4.33. With last weeks bar showing an upper and lower price shadow, the underlying market remains in consolidation at this level. The current price structure is a bearish flag with the potential to breakdown to retest the $4.00 support level in the coming weeks.


Indicator: Relative Strength 14
Confirmation of a loss of momentum is shown as the RSI moves below the “70” and now testing the 50 level, a further movement below 50 signals a loss of positive momentum and would confirm a potential retest of $4.00 underway. The RSI requires a continued reading above the 50 level to signal positive price momentum.

It should be remembered the RSI can track above the 50 -70 level for many months at a time and currently remains a signal of positive price momentum.

Black and White Technical Report: The Week Beginning 12/07/2021, FP Markets
Comments from last week:  
 The “midpoint” resistance set from the strong bar of 3 weeks ago is set at $4.33. This may be the go-to level for Copper in the coming week. A closing price over this level would be a very bullish signal for further gains in the coming weeks.

The price chart is currently setting up a consolidation range between $4.00 and this current resistance of $4.33, a breakout either way of these levels would be very decisive.


Last week’s spike in Volatility reflected the sudden change in buyer sentiment as inflation number were released along with Employment numbers. 

What should be noticed on this Weekly chart is the final reading on Friday is well off the 18+ midweek high reading. 

This week may see a further decline as major equities rally into new highs. 

The XVI is the difference of 1-3 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.   

Black and White Technical Report: The Week Beginning 12/07/2021, FP Markets
Comments from last week:
 Currently the underlying Volatility remains steady below the key 13 level, traders should monitor these levels as an indication of market sentiment as a leading indicator for equities.

Overall, in the chart looking back to MAY 2020 the volatility levels have steadily declined, a good outcome for a forward steady and higher equities market.


Price structure:
USD index price is currently rejecting from the “neckline” area currently around 92.8. The 93.45 level remains the primary target, but a retest of 91.60 the first indicative target level as Bearish price divergence shows in the RSI currently leading to lower values. The underlying price structure remains Bullish.


Indicator: Relative Strength 14
Relative Strength has set a new high over the 70 level and dipped below, to move higher to make a lower high as price makes a closing higher high. Bearish divergence is now in place.

Black and White Technical Report: The Week Beginning 12/07/2021, FP Markets
Comments from last week: 
 Following a very strong bullish move towards the “neckline” the final bar has set an outside range (reversal) for a potential retest of 91.66. But this would be a strong positive for the underlying strength of the DXY to resurface and set up for another retest of the neckline and potentially 93.45.

In the larger view, the inverse Head and Shoulder pattern has an extended price target of 94.85.


Price structure:  This commodity is news driven by supply -demand.
Last week’s OP (outside period) has become the first strong signal of price rejection at the $75.20 level. The low of the weekly range also broke below the current trendline.

Give the recent strong price run of the WTI contract further consolidation at these levels would be a very Bullish sign for further gains toward the long term target of $100.0


Indicator: Relative Strength 14
RSI turning lower over the 70 level, in line with current price moves only confirms the underlying price momentum is slowing. 

The RSI may be showing a larger time frame divergence signal from Q1 2021 high. Look for a swing below the “60” level to confirm.

Black and White Technical Report: The Week Beginning 12/07/2021, FP Markets
Comments from last week
: Traders have started to talk about $100 Oil before Christmas 2021. At the current rate of advancement that may come to pass and, in the process, may be the circuit breaker for high inflation. The Major resistance of 75.20 from July 2018 has been broken, but many more levels of resistance remain between this current value and $100.0.

Currently with RSI turning sideways price consolidation would be expected at these levels with $66.00 remaining the major support level. This is a good outcome for Australian producers WPL, OSH and STO.

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