Black and White Technical Report: The Week Beginning 22/11/2021

Major Indices’ have remained in “balance” this week.

The Nasdaq has a short-term Gap open sell signal in place and may also show further consolidation at these current levels.

Bull markets tend to “grind” higher, frustrating the short sellers, this continues to be the case in the price action of the past week.

There are NO major technical reversal signals across the Indices’ and precious metals sector.

A seasonally bullish period for Gold and Silver, with Silver showing Resistance at $25.52, this remains the key level to clear before Silver could be called a Bull market.

XJO WEEKLY    
Price structure:
The Australian XJO continues with consolidation below the 7530 level. Price movement is now outside of the trendline. A price breakdown below the 7200 level would put the index into a Primary down trend, until that occurs, the Index maintains a Bullish stance as these types of consolidation often lead to significant breakouts higher. From Mid July 2021 the increased number of inside (IP)  and outside weeks (OP) has statistically exceeded the normal distribution of around 12% or 12/100 bars. Between Q2 and Q3 2020 a similar type of consolidation occurred prior to the December breakout higher.

 

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 continued movement above the key level of 50 to show  bullish price momentum. 

Comments from last week The 7530-midpoint level set 14 week ago remains the key resistance level to trade and close over for the Index to again be declared bullish. Continued consolidation below this level may set up a bearish retest of the 7197 -7200 level again. While the Index remains within the confines of a Primary UP trend, a closing breakdown below 7200 would shake the buyers with a bear trend declared. Last week’s “inside” Hammer bar shows the market in balance, the break on either side should be decisive for the coming weeks.

XJO DAILY  
Price structure:
The Daily time frame offers a clear picture of resistance at the 7472, given the number of lower shadows (wicks) of the trading day’s support is clearly evident from below the 7370 level. In the short term the small range bar set last Friday overlapping the Thursday bar is a short-term bearish signal of weak prices. A further retracement into the 7350 level is possible in the early part of this trading week.

Indicator:  Relative Strength 14
The RSI has again retested the 50 level and moved moderately higher again. In the short term a continued move above this key level should be expected with price moving over the 7472 level.

Indicator:  VOLUME
Trading volumes have remained benign on the rising price structure; this is not a great long-term signal for the Bullish. Last Friday’s positive close on low volume indicates a low participation rate, although the sellers may be exhausted the Buyer are unwilling to enter the market on volume. 

Comments from last week: The Pivot point set above 7370 shows a bullish reversal, however 7472 remains the short-term Daily resistance. While the Index remains within the current trading range from 7216 to 7632, the pattern remains consistent with a “broad top” pattern developing. For the markets to stage a positive breakout higher strong price movement will be required in the heavily weighted Banks along with BHP, RIO, CSL and WES.

S&P 500 WEEKLY
Price structure:
A second inside Weekly range following the push higher 3 weeks ago. This type of consolidation shows a market in balance, with the Primary UP trend already in place a further move higher should be expected out of this small pennant pattern. Currently, important support remains at 4545 points. Upper channel resistance offers a price target of 4880 points. (current close 4697)

Indicator:  Relative Strength Indicator 14
A signal of decreasing momentum as the Relative Strength Indicator (14) turns sideways as the calculation takes in 2 sideways small range closing differentials. The Relative Strength Indicator remains in a good place for further strength, a continued 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. 

Comments from last week: The S&P Weekly inside period down close (IPd) shows the market in balance around the 4700-point level. A break to the lower side targets the 4545 Resistance/ Support level. There is NO indication of a top in place or even one developing as the market again pushes this all-time high area. This type of price action can remain bullish as the inside period has a lower shadow indicating late week buying.

S&P 500 DAILY
Price structure:
The developing trading range is between 4650 and 4721 (Futures contract high = 4723 points). The small range between open and close of each recent trading day shows indecision. The trading range can develop further with a retest of the support level of 4650 in the coming days. This level must hold for the overall picture to remain the bullish consolidation phase required prior to a further move higher.

Indicator: Relative Strength 14
Relative Strength Indicator (14) has turned lower from the 70 level a signal of slowing price momentum, a further movement higher over 70 would indicate further strong price momentum and may be viewed as over-brought and potentially offer a bearish divergence sell signal should the reading move lower. A further close below the 70 level would alert traders to failing upward price momentum.

Comments from last week: Within the daily price structure, the closing price support at 4650 will be the key area this week. Tuesday, Wednesday, Thursday have set up a bullish 3 bar reversal pattern confirmed on Fridays close. Although the Index has put in a very strong price move from the 4400 level a further leg higher is possible.

 

NASDAQ DAILY
Price structure:
A new contract high with a “Gap open”, this is a Bearish signal of exhaustion, the small range day last Friday shows little commitment from the Buyers and may lead to profit taking on any price weakness early this week. Price has again closed at the Upper Bollinger band showing maximum relative volatility, historically, price can “walk” the band for many weeks, however the Gap open is a technical “watch and Sell” signal in the short term.

 

Indicator: Relative Strength 14
Relative Strength Indicator moving over the 70 level is a strong sign of improving price momentum, with the 70 level and a lower high reading a possibility exists for slowing momentum leading to an exhaustion move lower. 

Comments from last week: During April 2021 (circled) the Nasdaq showed a gap open following a strong price rally, late June showed the same pattern as did late August. Last week the Gap open was identified as a bearish signal. Historically the Nasdaq shows consolidation following this type of price event. The rising 20 period moving average set in the Bollinger band would be the first level of support.

 

USD Spot GOLD – DAILY     
Price structure: No evidence of a Bull market.
The Daily OPd (outside period down close) has marked the high for the short term, last Wednesday’s following UP close bar shows the failed retest of the high with a strong range bar lower on Friday. This chart shows support at $1834 as the potential retest price target for the short term. The Primary Trend remains UP, the current consolidation remains bullish for further gains in the coming weeks. A close over the OPD high would be very bullish in the short term.

Indicator:  Relative Strength 14
Relative Strength Indicator 14 moving below the 70 level, a SELL divergence signal is now in place as the RSI has failed to make a new high on last Wednesday’s push higher. 

Comments from last week: Could this be the early stage of the breakout rally? Possibly is the best answer with the $1834 resistance level easily breached with a large range day. The all time high of $1916.4 is the next resistance level. The Daily chart has now entered an UP trend from the HL point identified last week. Gold has staged strong price rallies in the past only to fail on profit taking. (A 10% price move in Gold would set the metal at a new all-time high of $2052.60)

SILVER DAILY    
Price structure:
Good consolidation around the $24.90 neckline level is developing in the Daily chart for Silver. Last Tuesday also showed an OPd marking the high. Current retracement activity is identified and a Bullish flag pattern, and remains a positive development around this $24.90 area. Resistance at $25.52 remains the key level to clear before Silver could be called a Bull market.

Indicator:  Relative Strength 14
Current Relative Strength is moving over the key 50 level, towards the 70 level, a very good signal for further momentum gains in price. A move below the 50 level would be very bearish in the short term. 

Comments from last week: The inverse Head and Shoulder pattern within the Daily chart offers a target of $28.0 or a 10% price move, with the resistance level of $24.90 broken and retested on Friday, further upside would be expected should the metal close over the $25.52 level. Silver remains within a much broader consolidation range above $21.60 and below $30.30. (A 10% price move in Gold would set the metal at a new all-time high of $2052.60).

 

AUD GOLD DAILY    
Price structure:
Continuing weakness in the $AUD has helped push the AUD XAU price higher above the MAJOR resistance level of $2541.0. Last Friday’s OPd can mark the short-term high is in place with a potential retest of $2477.0 possible on a weaker underlying $USD Gold price.

Indicator Relative Strength 14
Relative Strength moving strongly above the 70 level and is in line with strong price movements. Within the current Daily consolidation, the RSI will move sideways, a further movement below the 70 level would indicate a short term bearish reversal.

Comments from last week:  Last week continued the strong price movement higher for Gold in $AUD terms. This is a great outcome for the local producers. Following strong price movements, consolidation can occur, this should be monitored above the $2541.0 level as a very bullish signal for further gains. Look for continued support at this $2541 level, with the next big resistance level of $2712 the longer-term target.

COPPER DAILY   
Price structure:
From the Pivot point of 2 weeks ago, last week Copper staged a sell off to test the current Trendline support area. It is important to notice the closing price for the week is above the key $4.33 support/resistance level. This is a good outcome on the Weekly “hammer bar” now in place. A further move higher would show a new higher low point has developed and a retest of the $4.80 all time high as the target.

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

Comments from last week:   Last week Copper set a very Bullish pivot at a MAJOR support level, this again sets up a potential retest of the high of $4.80. The underlying trend in Copper remains UP. The consolidation area has 3 major low points 1, 2, 3 shown, without a price break below (3) the pattern may be deemed complete, prior to a bullish breakout.

AUSTRALIAN VOLATILITY INDEX:
The price of forward insurance (PUT options) have declined, with the week’s reading remaining in the Bullish zone between 11.0 and 13.0. This remains a mildly bullish signal for further gains in equity prices.

The XVI is the difference between 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.   

Comments from last week: Currently reflecting the underlying bullishness in the Australian equities market, the current reading would infer further gains as the forward price of  buying risk cover is no longer in demand.

USD DOLLAR INDEX  
Price structure:
The USD has entered a Bull market move with the price action now above the 94.70 level and the 95.70 level. Friday’s high and Wednesday’s high have set a small double high level that may provide some resistance in the short term. Daily consolidation around this level would be a Bullish signal for further gains in the coming weeks.

Indicator:  Relative Strength 14
The 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.

Comments from last week:  Last week the DXY traded above the major level of 94.70. The broad base from August 2020 is complete. Look for price consolidation around this level as a bullish signal for further gains. A strong close below this level may see the 93.45 level retested, however following the strong impulsive price movement on Wednesday, further gains should be expected.

WTI CRUDE OIL
Price structure:  This commodity is news driven by supply -demand.
Last week saw a retest of the key $75.20 support level. Traders should look for support at this level in the coming days to further increase the Bullish view for the WTI contract. Underlying Primary trend remains up with the $107.73 June 2014 high as the ultimate target with $100 as the key psychological level as the first major resistance level on this UP trend.

 

Indicator: Relative Strength 14
The sharp turn lower in the RSI reading is in line with the developing Flag pattern. In the event of pattern failure (strong close below the $75.20 level) RSI may move to the 30 level indicating the loss of upward momentum has turned to downward momentum.

Comments from last week: The Weekly Flag pattern continues to develop with the $75.20 support level and current Trendline holding. WTI remains within a Primary UP trend with the $107.13 target in place. Should a strong close below the important $75.20 level occur the resolve of the Buyers may be shaken in the short term, however the primary trend will remain in place. RSI has set a sharp reversal to move below the 70 level. Close inspection shows the indicator “rolling” sideways putting the longs on alert of slowing momentum, this is a typical type of movement as retracement flag patterns occur.