Black and White Technical Report: The Week Beginning 03/01/2022

All major indices had the lightest of trading volumes again last week. This week is again a shortened week and 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 successfully tested support lows current movements point to further gains with an important retest of highs, this could confirm the Bullish case for Gold in 2022.

XJO WEEKLY Price structure:

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The information in this report is of a general nature only. It is not personal financial product advice. It does not take into account your objectives, financial situation, or needs. You should therefore consider the appropriateness of this general information in light of these. The Australian School of Technical Analysis (www.astatrading.com) recommend that you refer to the Product Disclosure Statements of any financial products which are discussed in this report before making any investment decisions. ASTA accepts no responsibility for your actions and recommends you contact a licensed advisor before acting on any information contained in this general information report.

With the retest towards 7530, technically the index remains within a now 30+ week consolidation zone. While individual equities will have their own chart patterns, this type of consolidation only suggests, money flow is not increasing at the heavily weighted top end of the Index. Past observations show the breakout when it comes can be decisive and given the Primary trend is UP, a breakout to the upside would be expected. The “tentative” ( 2 touch) trendline should be watched closely for further support.

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 increase in value, this is a good position for further gains. The Relative strength Indicator reflects price momentum.

Comments from Last week: 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.

XJO DAILY Price structure:

Last Friday’s reversal bar has been completed on very low volume and may be a small risk off event prior to this long weekend following a great run up to the 7530 level. The 7370 level will be critical to hold in the coming days, however a breakout over 7530 would be a very bullish signal within this large consolidation.

Indicator: Relative strength 14:

The Relative strength Indicator (14) reflecting the underlying price momentum has moved lower taking in Friday large range movement, but remains above the key 50 level. Indicating the upside momentum has decreased.
On a daily basis continued movement over the 50 level would show positive momentum.

Indicator: VOLUME:

Trading volumes have been extremely light in the past week during this consolidating price structure, with Friday putting in the 2nd lowest volume day of the year.

Comments from Last week: 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.

 

S&P 500 WEEKLY Price structure:

The S&P 500 has set a new all time high during the past week following the previous weeks OPu, however this is not a decisive price move as the range, low to high is very short. The expectation is for further consolidation along the 4720 level, on price weakness a retest of the 4545 level is possible, this would be the area to monitor for a buy signal.
On a broader observation this long rising wedge pattern can set off a sell down on a break of the underlying pattern line, a retest of the 4545 level should be monitored for both a bullish hold AND a bear signal should the range high to low be a long-range bar. February Q1 2020 shows an excellent example.

Indicator: Relative strength Indicator 14.

It still remains a concern the RSI has not made a new high. But the relative strength indicator has negated the Bearish divergence signal (so far). The current sideways movement is reflective of a positive outcome for the week of
consolidation. A reading below the key 50 level would signal loss of momentum and potentially further price weakness.

Comments from Last week: 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.

S&P 500 DAILY Price structure:

The four short range days last week do not indicate selling, keeping in mind this is a very light volume time of the year. The first bullish signal may come from a successful retest of the 4720 level. (See last week notes below). The OPd (Outside Period – down close) is often a marker for a turning point, a retest of 4720
could be expected.

Indicator: Relative strength 14:

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

Comments from Last week: 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.

NASDAQ DAILY Price structure:

During the past week the Nasdaq has set a 3-bar reversal pattern and followed lower, as with the broader markets this has been completed on very low volumes. This index remains within a large consolidation zone with 15700 as support and 16776 as resistance. The descending pattern breakout has the potential to “retest” the breakout point and the long term “tentative trendline.

Indicator: Relative strength 14:

Relative strength indicator moving above the 50 level is a sign of price momentum strengthening, 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 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. Relative strength indicator moving above the 50 level is a sign of price momentum strengthening, 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.

USD Spot GOLD – DAILY:

No underlying Primary trend is evident in this long consolidation phase, however the “higher low” observation at the 3 rd retest of the trendline prior to 2 retests of the $1788.0 level is important. The Mid week retest of the $1788 level is the most important development for building a current Bullish case in Gold.
With price momentum turning higher (RSI), a breakthrough of the $1834.0 level could be expected with a further retest of the important $1876.0 level. A retest of the $1876.0 would confirm a bullish stance for Gold into 2022.

Indicator: Relative Strength 14:

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

Comments from Last week: 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.

SILVER DAILY Price structure: No Bull market.

Silver has also provided an important “retest” of a past support level at $22.50. With a further cross of the $23.50 Last Tuesday high a retest of the Down Trendline would be an important development. Silver has entered into an early stage of a Bull run, with several resistance levels ahead, a breakout from these level would force a short cover and potential run to the $27.70 highs.

Indicator: Relative strength 14:

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

Comments from Last week: 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.

AUD GOLD DAILY Price structure:

The current descending triangle is now deemed complete with the 3 low points now in place along the support level of $2477.0 and approximately 2/3 along to the apex point of the triangle. This structure could underpin the current support in many Australian Gold producers. With the underlying $USD Gold looking bullish, only a strengthening $AUD would force the price lower.

Indicator Relative strength 14:

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

Comments from Last week: 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.

COPPER DAILY Price structure:

With the Weekly price now closing above the very important level of $4.33 following the pivot set 2 weeks ago, the underlying price has set the stage for a further retest of the $4.80 area. Copper remains within a consolidation zone with $4.00 support and $4.80 resistance.

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 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.

AUSTRALIAN VOLATILITY INDEX:

Forward Volatility has moved lower and remains in 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:

A break down from support and sharp recovery set the Fake out low. The USD Index remains within the consolidation area with the potential to retest the 96.98 level.
Currently the support level has 2 touches a 3 rd retest with reversal price action would set the stage for a breakout higher. In the coming week a close below the 95.70 level would have the sellers in control and will have set a top with the potential to retest the trendline and below.

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 in line with a breakdown in price.

Comments from Last week: 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 to the downside.

WTI – CRUDE OIL, Price structure:
This commodity is highly news driven by supply -demand.

The initial 3 bar reversal has followed thru with higher prices. With last week testing and respecting the $75.20 resistance level further consolidation below this level can occur.
A breakout higher with a closing price over the $75.20 would be a very bullish signal for further gains and retest of $84.25

Indicator: Relative strength 14:

Relative strength Indicator turning higher as of 3 weeks ago the market remained in balance. The sharp turn higher is a very good signal of sharply higher price momentum, the cross above the 50 level now confirms the bullish view.

Comments from Last week: 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.