Black and White Technical Report: The Week Beginning 28/12/2021

All major indices had the lightest trading volumes for the year last week. Without evidence of reversal patterns, the new year period may extend the current Bull run in the US along with Copper and Oil looking very positive for further gains. The immediate issues facing markets early in this new year are Omicron and the effects on
global growth along with inflation, is it transitory or not. Gold and Silver look to have set recent lows as support points for further gains.

XJO WEEKLY Price structure:

Last weeks OPu (outside period up close) is a good signal for further gains in the coming week. With the close at the high a potential breakthrough of 7530 is the best outcome.

The past 30 weeks of consolidation may have frustrated the short-term trader, however often breakouts from this type of price action are decisive and signal the new direction. 7715 remains the upside target, inline with the Primary trend remaining UP. A close below the 7200 level on this Weekly chart would be a bearish move and may signal a
long-term top is in.

Indicator: Relative strength 14:

Relative strength has turned higher, as the reading is above the 50 level, the next move in the RSI will be telling should it move higher, this is a good position for further gains. The Relative strength Indicator reflects price momentum.

Comments from Last week: The current inside period (IPd) shows the market in balance, this type of price display can provide a great trading signal on the break of the high or the low. Overall, the XJO remains in consolidation above 7200 and below 7350, previous consolidation ranges from Q2 and Q3 2020 and Q1 and Q2 2021 have provided support for the next leg higher. He Index remains within a Primary UP trend. A Weekly closing price below 7200 would signal a top is in with a potential retest of 6900.

XJO DAILY Price structure:

With Daily resistance still showing at 7420, the daily is now showing an inverse head and shoulder pattern ( bullish) however the first breakout of the neckline is often met with reversal to “retest” the neckline, this confirms the pattern. Traders should be ready to take a bullish stance on the retest. The 3 Bar reversal was tested prior to the current bullish move, it would not be expected to be retested again.

Indicator: Relative strength 14:

The Relative strength Indicator (14) reflecting the underlying price momentum has moved higher and remains above the key 50 level. Showing the downside momentum has eased. A continued movement over the 50 level would show a continuing positive change of momentum.

Indicator: VOLUME: Trading volumes have been extremely light in the past week during this consolidating price structure, with Friday putting in the lowest volume day of the year.

Comments from Last week: Last has set an a,b,c type retracement finishing with a 3 Bar reversal signal.
The potential for a retest of 7216 remains, this would extend the pattern into a small 5 wave down, further reversal signal would be monitored from this support level. Consolidation periods such as this from June 2021 can be frustrating, however for the astute trader the breakout is often decisive.

S&P 500 WEEKLY Price structure:

An outside up-close week marking a new all time high. Further gains should be expected off this current support level of 4545. The Weekly chart shows the recent past UP-close bars are a stronger/ larger range than the reversal bars, showing the buyers remain in full control. The underlying Primary trend remains UP.

Indicator: Relative strength Indicator 14.

It remains a concern the RSI has not made a new high, often the calculation The relative strength indicator has negated the Bearish divergence signal. The current sideways movement is a positive outcome for the week of consolidation. A reading below the key 50 level would signal loss of momentum and price weakness.

Comments from Last week: The pivot point from 2 weeks ago has not followed through higher with the Index remaining within the 4650 to 4720 range. Last week showed a short price range compared to the pivot bar week, a good signal the sellers DO NOT have control. Look for a closing price above 4720 to signal a further leg higher.

S&P 500 DAILY Price structure:

The most important technical observation in this current Daily picture is the “HL” ( higher low) retesting the 4545 level with immediate buying taking place with the final close at an all-time high on both the Daily and Weekly.
Look for a further breakout higher and possible retest of this important 4720 level.

Indicator: Relative strength 14:

Relative strength Indicator (14) has turned sharply higher and remains above the key 50 level. A further close above the 50 level would alert traders to increasing price momentum with further upside price action.

 

Comments from Last week: 4630 to 4650 remains solid intraday support, last Friday finished with a FO and a hammer, giving a bullish signal for the start of this week. The tentative trendline remains in place a short retest of this level would further strengthen the bullish case for further gains. For the bears, a closing price below 4600 would be a decisive move by the sellers and target 4545. However the Primary trend remains UP, with a breakout above 4720 the higher probability.

NASDAQ DAILY Price structure:

The Nasdaq is building a descending triangle pattern, with price NOT making new highs with the S&P this could be looked at as a bearish divergence signal and should be monitored for further divergence.
Basic Dow Theory states the averages must confirm to remain in a Bullish market (or bear market) currently they do not. This descending type pattern can be a continuation pattern with a breakout higher, given the current successful retest of the underlying Trendline, the expectation would be for a break higher.

Indicator: Relative strength 14:

Relative strength indicator moving above the 50 level is a sign of price momentum strenghening, however the current reading swinging around the shows waning momentum and should be monitored for a move higher as a precursor to price breaking higher.

Comments from Last week: The Nasdaq remains within a very volatile consolidation period with 15700 remain the key support level.nThe key observation is the Gap open (sell) last Thursday, was not followed thru on Friday with a further “Gap open” (buy) on Friday.
This developing Pennant is a continuation pattern and based on the current Primary UP trend the next breakout should be over the 16300 level to test the 16700 level.

USD Spot GOLD – DAILY Price structure: No evidence of a Bull market.

Buying being met with selling, price moving around historic support and resistance levels only leads to further consolidation. Gold has to put in some moves before this chart could be called Bullish. The current retest and support of the $1788.0 level is a positive, however further gains are required to break away from the $1834.0 level to give trader some real direction.

Indicator: Relative Strength 14:

Relative strength shows a reading above the 50 level and turning sideways to up as upside momentum continues to improve.

Comments from Last week: From the Fake out low (FO) testing the Weekly trendline GOLD has moved higher over $1788 but failed to follow thru with Friday setting a Shooting star indicating buyers unwilling to hold over the weekend period. Traders could look for a retest of the $1788.0 level to hold, further price moves below this level will indicate further consolidation in the coming week.

SILVER DAILY Price structure: No Bull market.

Daily silver is displaying a similar picture to Gold with an important level of $22.50 again traded over off the back of the recent retest the $21.60 level.
The $24.90 level is currently the key level to cross before we could call Silver Bullish, until then metal will remain in consolidation and highly tradeable.

Indicator: Relative strength 14:

Current Relative strength is moving above the 50 level and now turning higher from the 30 and 50 level shows bullish price momentum improving. A continuing move above the 50 level would be very bullish in the short term.

Comments from Last week: As discussed last week, Silver has now completed a retest of the $21.60 level. The Hammer bar and follow through on Thursday has new a bullish pivot point. Resistance remains at the $22.50 level, price closing over this level would be very Bullish for further gains.

AUD GOLD DAILY Price structure:

This descending pattern has set 2 low points, a third low at the 2477.0 level could be expected to complete the pattern. The internal price action within the pattern shows strong bullish days followed by consolidation indicating price support within the pattern. 2712.0 remains the upside target in the longer term view, a closing breakout above $2541.0 would signal a potential bullish move underway.

Indicator Relative strength 14:

Relative strength moving sideways has turned higher and remains above the key 50 level this shows an increase of positive momentum, this ranging movement is typical with consolidation areas.

Comments from Last week: The current level to hold at $2477.0 for the descending pattern, a Bullish outcome only when the base is complete. The current consolidation from mid-November displays two significant touch points, a third would complete the pattern before we look for a breakout.

COPPER DAILY Price structure:
The Weekly chart of Copper has again set a bullish pivot point above this key level of $4.33.
The price chart remains in consolidation from Q1 2021. The next key resistance level is $4.50, a close above $4.50 would signal a retest of the high is underway. A further close below $4.33 would be a signal of further price consolidation.

Indicator: Relative strength 14:

Current readings swing above and below the 50 level reflect the current consolidation
underway. 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: The Weekly chart of Copper shows a new Bullish Hammer having broken the previous low 5 periods prior (FO) and finding buying support to bring price back to the key $4.33 area.
Copper remains in price consolidation, with lower shadows setting the lower prices as buyers provide support at and above the $4.0 level.

AUSTRALIAN VOLATILITY INDEX:

Forward Volatility has moved lower into the Bullish / complacency for equities window. Seasonally this period of the year has seen consistent market gains. The forward pricing for risk has declined indicating this year may also see the Xmas – New Year rally. 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: Forward Volatility has moved lower into the Bullish for equities window. Seasonally this period of the year has seen consistent market gains.

USD DOLLAR INDEX Price structure:
The underlying Primary trend remains UP, but consolidation is again underway above 95.70 and below 96.98. A breakout either way will give direction in the coming weeks. Given the RSI is trending down, that breakout could be expected top the downside.

Indicator: Relative strength 14:

The Relative strength has turned lower in line with price movements and consolidating momentum. The potential to move higher on further price strength only while remaining above the 50 level. The current direction could see a break below this key level inline with a breakdown in price.

Comments from Last week: Last Friday saw an impulsive (strong range closing towards the high) price movement higher. This secondary consolidation is developing into a continuation pennant with the 97.75 level remaining the ultimate target. This outcome would place pressure on the $AUD, providing support for local Gold producers and the Commodities sector in general.

WTI CRUDE OIL, Price structure:

This commodity is news driven by supply -demand. The mid week retest and hold of the $66.0 is a very Bullish signal for further gains. The $75.20 level is the next key level to break.

Indicator: Relative strength 14:

Relative strength Indicator turning higher as 2 weeks ago the market remained in balance. The sharp turn higher is a very good signal of sharply higher price momentum, a cross above the 50 level would confirm the bullish view. This is the area to now monitor for a potential Bullish divergence signal to develop over the coming weeks.

Comments from Last week: The WTI contract remains within the definition of a Primary UP trend.
Last week set an inside period closing lower than the open. (IPd) with the bullish “3 bar” reversal pattern now in place following the successful retest of the $61.80 level, the market remains in balance.