Black and White Technical Report: The Week Beginning 23/08/2021

The week that was going to be the beginning of a corrective phase has ended on the highs after a short sharp retracement with Dip buyers stepping in.

This seems like the never ending bull market, but as technical traders the emphasis is on finding and exploiting price anomalies followed by directional price momentum, not picking the next bear or bull market.

With the mid-week retracement, the underlying Primary trend has remained “UP” for the major indices. This weeks price movement will be monitored for a potential breakout to new all time high, or a failure and potential lower high developing.

Gold and Silver are still under selling pressure with Gold remaining down 9% from this time last year.

WTI Oil has entered a Primary Down trend with the breakdown of the key $66.00 level.

Price structure:
As broad observation the Index is back in line to the 2018 advancement line, following the sharp corrective movement during Q1 2020.

Last week’s Australian SPI futures close suggest a strong opening today, the observation of the “pivot point” carries less weight as the underlying Primary trend is UP.

It’s the potential of a further breakdown below 7430 that will get the attention of the longer-term holders.

Last week’s bar with the larger range is an impulsive move, the current primary trend has a few of them showing, without any meaningful follow through.


Indicator: Relative Strength 14
RSI has turned lower, below the 70 level after negating the potential momentum divergence signal.

The RSI should be monitored for a continued move below the key level of 70 to show a shift lower in price momentum. 

Black and White Technical Report: The Week Beginning 23/08/2021, FP Markets
Comments from Last week: 
 The Weekly primary trend continues on with 7715 in sight. Last week’s range is shorter (-24) than the previous breakout week indicating a slowing of bullish interest. This Index is heavily weighted with CSL, APT and the 4 banks along with WES. However behind the scenes the smaller equities included in the XAO have also helped push that Index to an all time high.


Price structure:
Last week the Bearish wedge pattern played out into the short price decline. The low of 7429 has tested the breakout bar set on the 02/08/2021. 

The most important observation in this daily chart is last Fridays range inside of Wednesday an Thursday, setting up a 3 Bar reversal pattern.

The line of commitment for the Bullish is the intraday support now set at 7430.  

Indicator:  Relative Strength 14
The Relative Strength Indicator 14 shows the decrease of upward price momentum, most times this indicator shows the obvious, and in this case the observation is the turning sideways below the 50 level. While still showing weak price momentum, any turn higher would a strong indicator of Buying strength. 

Indicator:  VOLUME
High volumes into the close of the week suggest accumulation as Friday’s price range tested higher prices. 

Black and White Technical Report: The Week Beginning 23/08/2021, FP Markets

Comments from last week:  It is rare the market would advance for 10+ days in a stretch, the development of the Bear wedge is only another way of showing the extended move that comes from a trending action, and not necessarily indicating a correction in price is coming. These types of pattern can lead to simple sideways consolidation. This market, as with all markets is dependent on underlying liquidity, so far that has not changed. The Relative strength would be monitored for a close below the 70 level as the first indication of a loss of underlying momentum. Given the persistent advance this can be quite sudden.


Price structure:
Last week’s OP (outside period) has the potential to mark the high price prior to a downturn.

This type of Weekly range has shown many times without follow through lower, however traders should remain vigilant for potential reversal signals in this persistent UP trend.

The support level shown at 4320 remains the first level to test in a retracement move.


Indicator:  Relative Strength Indicator 14
Observation, the Relative Strength Indicator first moved over the “70” level in April this year. 

Currently the Relative strength Indicator has re-emerged and remains as a developing divergence sell signal. The Sell line is shown around the 65 level. It can also be observed the RSI can track sideways as price consolidation take place.

Black and White Technical Report: The Week Beginning 23/08/2021, FP Markets

Comments from last week: Since the 1 week reversal made during late January the Index has been persistent in the grind higher with short sharp retests of some index number, recently 4240.

Without some form of catalyst, the market can continue to grind higher, the first signal of a potential top will be an impulsive (large range) movement lower, followed by an attempt to regain the highs in the following week – weeks. Tops take time to develop, at this point in time there is no indication of a top in place.


Price structure:
The Trendline has been repositioned as “tentative” following last week’s short breakdown. Last Friday has set the Bullish pivot point reversal to close over 4432. The expectation would be for follow thru to new all-time highs above 4480 in the coming days. This is an important level for the buyers to take out for the market to remain Bullish. The new intraday support is now 4367 and will be the decisive level to hold in the coming days.


Indicator: Relative strength 14
The RSI move below the 70 level would show slowing momentum, however the upturn in response to the pivot reversal is a good indicator of continued positive momentum, a move below the 50 level would indicate a loss of price momentum and would be viewed as a signal to retest the support level at 4394 – 4367.

Black and White Technical Report: The Week Beginning 23/08/2021, FP Markets

Comments from last week:  The small break above 4432 was tested during Thursday, making a lower low than Wednesday and regaining the high in the same trading period (OPu). This type of outside period can market a turning point 2-3 days in advance, short term traders would monitor the 4432 level in the coming days for a close below this level as the first indication of a turning point in underlying price.


Price structure:  This Index is the most concerning for traders
In line with the S&P the Nasdaq has set a bullish Pivot point reversal with 15184 remaining the key resistance level to test. In a broader view the Index remains within a trading range of 14765 support and 15184 resistance. The new “tentative” trendline is now in place and will remain the first barometer of strength when the current price movement remain above this line. Underlying Primary trend remain UP.


Indicator: Relative Strength 14
The Relative Strength Indicator has turned higher last week after making a lower low following a week registering a reading below the 70 level. A BEARISH divergence signal remains in place. The clear picture is the Index must take out the recent highs with an upturn in the RSI value and remain above 50.

Black and White Technical Report: The Week Beginning 23/08/2021, FP Markets

Comments from last week:  The key component for Bull market structure is the confirmation of the averages, in this case the Nasdaq has not made new highs in line with the S&P and Dow30. For traders this may be the first signal of an impending top, this does not indicate a market correction or the first stage of a bear market. But simply offers a window to monitor other Indices’ for evidence of a turning point as confirmation.


Price structure:
$1788 has again set the resistance level, this restest of the earlier support can be the precursor for a further decline as the new lower high develops. Confirmation of this would be the price moving below $1764.30, again this would be part of the general decline in price from the May high of $1916.

A price breakout above the $1788.0 level would be a very bullish signal for further gains to retest $1834.0.


Indicator:  Relative Strength 14
The Relative Strength is heading back to the 50 level a signal of increasing price momentum and should be monitored for a further move higher.  A movement over the key 50 level would be a very positive indicator for further price gains.

Black and White Technical Report: The Week Beginning 23/08/2021, FP Markets

Comments from last week: The sudden move in Gold on Monday morning last week was not a technical price movement but rather a liquidity event, these types of events have no consideration for support levels or trendlines. The impulsive move of two weeks ago became the hindsight precursor for lower prices (see last weeks notes), but the sudden price decline on early open on Monday could not have been foreseen. 

The weekly trendline has been redrawn as tentative (2 points of contact) 

Friday’s impulsive move sets the stage for further gains this week, with the resistance level at $1788 the first target and potentially the first resistance level.


Price structure:
While many try and compare the precious metals of Silver and Gold, in this current period Silver has not followed the Gold price higher and remains within the confines of a Primary downtrend. With two previous bullish divergence signals failing, the potential now is for a retest of the $21.60 level in the coming weeks. To give a bullish signal price would be required to close over the $23.75 level.


Indicator:  Relative Strength 14
Last week the Bullish divergence pattern again failed on Monday’s sharp opening price movement lower. Current Relative strength is viewed as weak upward momentum.

Black and White Technical Report: The Week Beginning 23/08/2021, FP Markets

Comments from last week: Three weeks ago, Silver displayed a Bullish divergence signal that resulted in a short rally to set the shooting star reversal, last week in this report the impulsive movement was noted for a potential move lower. The sudden movement on Monday morning has not followed thru lower but consolidated with Fridays close showing a pivot reversal. This may be a bullish signal for the coming week, with the low price of $22.50 as the marker signal for a resuming down trend.

A bullish divergence signal has reappeared, however should be taken in the context of the current down trend in place.


Price structure:
The past week has seen the $AUD decline below 0.72c driving the relative price of Gold in AUD terms higher. Should these levels hold in the coming days, this current rally will be a positive for the local producers in the short term. (read days not weeks)

Underlying USD Gold remains at a decision point at $1788.00 (see Gold note above) a further advance in the USD Gold price coupled with a decline in the $AUD will underpin both the Australian Gold sector and Australian equities.


Indicator: Relative Strength 14
Relative strength moving back above the 50 level is in line with price movements. Price momentum has turned positive, look for further gains in this reading to underscore the current strength in price.

Black and White Technical Report: The Week Beginning 23/08/2021, FP Markets
Comments from last week: 
 Movement in the underlying USD gold price and the $AUD saw a retest of the 2300 level. AUDXAU is trading within a range with $2477.0 as resistance. The current rally may find resistance at this level in the coming week.


Price structure: LME Inventories still remain historically low.
Copper has retested the $4.00 level with an immediate buying reaction to lift price of the lows. The Copper price chart is now firmly in a consolidation zone above the $4.00 level with the close at trendline. Last week’s price range was strong and has the potential to follow through lower to retest the $4.00 again, traders would be cognisant that a loss of price momentum can be a swift correction lower.

Should the market see a close below $4.00, Copper will enter into a Primary down trend.


Indicator: Relative Strength 14
Confirmation of a loss of momentum is shown as the RSI moves below the “50” level, a further movement below 30 signals a loss of positive momentum and would confirm a potential retest of $3.47 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 23/08/2021, FP Markets

Comments from last week: The gap open lower last Monday has provided the Buy signal for the following days. The current price move over the $4.33 midpoint level is a positive sign for further gains. Significant resistance remains at $4.50, this will be the level to clear for the buyers to take notice. 

Copper remains within a consolidation trading range.

A break of the $4.10 level would place Copper into a Primary down trend.


Volatilities can change very quickly on news items and trader sentiment. The tenant that states low volatility precedes high volatility also holds true.

Although the past week showed a spike in volatility the closing value has remained within the Bullish for equities window.

As the closing price was higher than the previous week, traders will on alert for potential higher values in the coming week.

The inferred outcome is that the cost of forward insurance in the form of PUT Option premium remains in line with the underlying time decay calculations. This can change quickly. But it should be noted the weekly close is lower than the previous week.

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 23/08/2021, FP Markets

Comments from last week: Risk moves to complacency; In the short term this remains bullish for equities. With the reading below 11 the risk is a movement higher, as markets begin showing sign of exhaustion in the coming days and weeks.


Price structure:
The impulsive price bar has set the tone for the breakout higher above two resistance levels. Being the opposite of last week’s observations.

The developed CUP and HANDLE pattern is bullish for further gains.

The small retest showing in last Friday’s close on the 93.45 level is a strong sign of price strength that needs immediate follow through higher in the coming days.

Indicator:  Relative Strength 14
Relative Strength bearish divergence has failed with the breakout higher. The Relative Strength remains positive for further gains. 

Black and White Technical Report: The Week Beginning 23/08/2021, FP Markets
Comments from last week: 
 An exact double top at 93.18 with an OP marking the high, Friday’s impulsive price movement (large range) set up the potential for a retest of the 92.07 level and 91.66 level in the coming days. A positive for GOLD.


Price structure:  This commodity is news driven by supply -demand.
The WTI Weekly chart has entered into a Primary downtrend. The current a, b, c retracement my result in a bullish breakout higher or may be viewed in hindsight as the first down turn to begin a bear market. Current support levels are important, the $66.00 level being broken to retest the $61.80 level shows a technical retracement underway.

My view would be for a simple a,b,c pattern to play out within the overall UP trend. 


Indicator: Relative Strength 14
The RSI divergence signal has followed through crossing the “sell” level and moving below the “50” level, this is a significant signal showing loss of positive price momentum and should be monitored for 1. A cross above the 50 level, 2. A continued move lower on a break of the $61.80 level.

Black and White Technical Report: The Week Beginning 23/08/2021, FP Markets

Comments from last week: During the past week a lot of commentary centred around  the Bearish move in Oil, however the impulsive move of two weeks ago has not resulted into any meaningful follow thru. The result last week has been the fake out movement below the $66.0 level with a close into the higher part of the range. The $66.0 level remains the key level to hold in the coming week with the potential for the WTI contract to trade into the highs around $75.20. The ultimate target remains at $100 bl.

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