Black and White Technical Report: The Week Beginning 13/04/2020

Within Robert Rhea’s work on Dow’s Theory, the description of a Bear market is described as thus.  (BTW, Charles DOW did not invent technical analysis)

“A primary bear market is the long downward movement interrupted by important rallies. It is caused by economic ills and does not terminate until stock prices have thoroughly discounted the worst that is apt to occur.
There are three principle phases of a bear market: the first represents the abandonment of hopes upon which stocks were purchased at inflated prices; the second reflects selling due to decreased business and earnings, and the third is caused by distress selling of sound securities, regardless of their value, by those who must find a cash market for at least a portion of their assets.”

Last week markets have again interrupted the recent decline by an important rally looking to continue.
Silver now displays a very important continuation pattern, at the time Gold looks ready to breakout over recent highs.
WTI Oil consolidates above the $20 level.


Price structure
Last week displayed a strong price bar, although finding resistance at 5410 has the potential to continue higher to test 5600 points. This is not a Bull market signal rather an important bear market rally.
Key support and resistance levels are now developing 4675 and 5410 points.


Indicator: Relative Strength
The RSI continues to move higher, the current reading over the key level of 30, shows an increasing positive price momentum. This should be monitored in the coming weeks for a bullish divergence signal.


Indicator: MACD
The MACD has been slow to react to the initial corrective price movement, and currently remains a “Sell” signal. 

Black and White Technical Report: The Week Beginning 13/04/2020, FP Markets

Comments from last week: The Weekly chart of the XJO has now started to develop the secondary phase following the “corrective movement” The price chart now shows resistance at the 5410, this important consolidation shows 4765 as the current closing price support level. In this coming week further price consolidation would be expected below 5410 resistance.

Price structure
In this shortened week Thursday’s high close over the Daily closing price resistance of 5286, is a very strong indicator for a continuation move higher. 

Indicator:  Relative Strength
The Bullish divergence signal is now complete and finished as the indicator has crossed the “50” level and has rolled lower again. A bullish signal continues in the RSI as the indicator remains over the key 50 level.

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. Overall the Volume profile is falling as the market moves higher, this indicates a lack of participation from the longer term accumulators. 

Black and White Technical Report: The Week Beginning 13/04/2020, FP Markets

Comments from last week: The Daily view of the XJO the bearish flag development with closing price resistance at 5286. The Volume study contains vital clues, Volume declines on price rallies and Volume increase on price declines, this classic bear market activity shows the potential for further declines in the coming days. Importantly the “OP” six bars back has marked the high within 3 bars.  (Krastins research)

Price structure
The Weekly high shows the potential resistance level of 2820 being tested, with a large range price bar in place, continuation over this level would be expected in the coming week.

Indicator:  Relative Strength Indicator
Relative Strength has turned sharply higher, this would be monitored for a move over the “50” level as a signal for further momentum gains in the coming week.

This Indicator will also be monitored for a bullish divergence signal, however this may take several weeks to develop.

Black and White Technical Report: The Week Beginning 13/04/2020, FP Markets

Comments from last week: A Secondary market is developing in this Index. Following the outside range of 2 weeks ago last week’s small range bar shows lack of control by the Buyers with w closing price towards the low of the range. The first Important support is the 2400 level.

Price structure
As an observation of Volatility the S&P is consistently printing large range daily movements when compared to earlier ranges in late 2019. 

The 2 recent price Gaps showing highlight the potential volatile opening movement on a daily basis. 

Thursday’s Gap open small range bar may provide some form of consolidation in the next week.
Further price gains may use the Daily 2940 level as resistance in the coming days.|

Indicator: Relative Strength
The Swing Buy signal has now completed. With RSI moving towards the “70” level price momentum is considered very strong.

Black and White Technical Report: The Week Beginning 13/04/2020, FP Markets

Comments from last week:  The Daily chart of the S&P 500 shows the intraday resistance level of 2650 developing. With price consolidation around the 2500 level a breakdown below this level would incite further selling into the already established daily down trend.

Last Friday’s down close bar has the potential to follow through into lower values with 2300 being the key level for traders to monitor in the coming days.

Price structure
Another very strong Impulsive movement, this is very Bullish for further gains in the near term.
$1610.90 will be the new support level for traders to watch in the coming week should any price weakness enter this very Bullish market.

The underlying PRIMARY TREND remains up.

Indicator:  Relative Strength
Last 2 weeks saw the Relative Strength Indicator swing higher, the past week the RSI has turned higher again, and importantly remains over the key “50” level.

Black and White Technical Report: The Week Beginning 13/04/2020, FP Markets
Comments from last week: The Weekly range shows a lower shadow with the close of the range remaining above the key $1610.90 level. The weekly Inside period (IPd) is showing the market in balance above this key level. The underlying Primary trend remains UP. Trader would look for a potential retest of the $1702 recent high.

Price structure
Monday’s and Tuesday’s small consolidation retesting near the $1631 level has preceded the breakout higher. 

Importantly Gold is now at a new closing high with regard to recent price action, an important win for the Buyers.
The price action over the past 3 months is displaying an inverse head and shoulder pattern, look for a bullish price continuation higher.
The $1631 is now an important support level in the coming weeks.

Indicator:  Relative Strength
A sign of overall positive momentum when the RSI remains above the 50 level. This should be monitored in the coming days for a sign of weakness should the 50 level be breached. A rising indicator would show improving price momentum. 

Black and White Technical Report: The Week Beginning 13/04/2020, FP Markets

Comments from last week: The price breakdown from the “Continuation Pennant” has quickly reversed to retest the $1631 level. This level will be key in the coming week. The “higher low” is a strong sign of continuation of this Primary UP trend. Last Friday’s short range bar has the potential to set up further consolidation below this level.

Price structure
The daily chart of Silver has completed the “Cup and Handle” pattern. Friday’s strong range from the small consolidation period is very Bullish. With continuing price momentum a retest of the $16.50 level will be an important achievement for the Bulls. The Daily price movement has entered an UP trend, however the Weekly pattern remains in a Down trend.

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

Black and White Technical Report: The Week Beginning 13/04/2020, FP Markets
Comments from last week: The daily chart of Silver may have finally turned the downside momentum corner as the initial price failure from the continuation Pennant has reversed to again test $14.50. Traders would notice the price rally is now “covering” the large downward movement from mid March. Last week’s “pivot point” and retest of the $14.50 is a strong sign the overall low may be in at $11.50. In the coming days a closing price over $14.50 would send a very bullish signal for a potential retest of resistance at $16.60.

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

The most important observation is the “lower shadow” of this week’s range, reminding the trader this indicator has the potential to move higher in the next week. 

Should the value fall in the coming days, this would show a continuing bullish signal in equities.

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 13/04/2020, FP Markets

Price structure
With solid support now in place at $98.45, this current retracement will be monitored for this important level to hold.

The current daily retracement in a bearish signal as the Monday and Thursday down days are relatively strong, this may lead to lower values in the coming days. 

Indicator: Relative Strength
Relative Strength has remained above the 50 level, however the sideways movement is a continuing sign of weak momentum.

Black and White Technical Report: The Week Beginning 13/04/2020, FP Markets
Comments from last week:  
 The Daily chart shows immediate support at the 98.45 level with a small price rally. The daily price bars remain “overlapping” each other and remains a weak signal of further price gains. As the final bar remains a short range, momentum may be waning to the upside.bA further retest of the 98.45 support would be the favoured move in the coming days.

Price structure
This commodity is news driven

The WTI contract price of Oil has entered an important consolidation phase following the OP that marked the low. This week’s Inside Period (IP) has remained below the $29.20 level now indicating this is the resistance level to watch in the coming days.

The underlying Primary trend remains down.


Indicator: Relative Strength
Relative Strength remains VERY weak as the reading is below 30. This should be monitored for a movement over the “30” level should price breakout higher over resistance. At this point in time the Indicator backs up the potential for further price consolidation. 

Black and White Technical Report: The Week Beginning 13/04/2020, FP Markets
Comments from last week:  WTI posts an “outside period” (OP) a strong signal the low is in.  The underlying primary trend for WTI is down, this reversal to test the $29.20 support / resistance level requires a follow through week to remain bullish. Should a daily close over this important level take place a further price target of resistance at $42.00 would be in play. Failure to close over the $29.20 only indicates consolidation below resistance, a bearish signal for a retest off the lows.

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Source - database | Page ID - 21431

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