Black and White Technical Report: The Week Beginning 21/04/2020

Global equities staged another gravity defying week by pushing higher and closing within the high of the week. I made the same type of comments during the late February 2020 highs.
Gold may have posted a minor reversal signal, along with Silver the metals remain in a very bullish trend. 
Volatility readings remain relatively high and may continue to hold these levels in the coming days.

XJO WEEKLY
Price structure:
During the market decline the large range week from mid March closed at the 50% of its range. This week the intra week high tested that level, a powerful signal of high price rejection. This current secondary rally remains weak in structure as last week’s range being a shorter range shows an unwillingness of the buyers to take the market higher.

Indicator: Relative Strength
The RSI continues to move higher, the current reading over the key level of 30, shows an increasing positive price momentum, but can currently be seen turning sideways. 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. 

Comments from last week: 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.

XJO DAILY
Price structure
Significant resistance can be seen developing at 5535, with the current price action trading at the lower edge of this bearish flag pattern a breakdown to retest the 5000 level is possible in the coming days. Only a solid close over 5535 would negate this view.

Indicator:  Relative Strength
A bullish signal continues in the RSI as the indicator remains over the key 50 level. Look for a movement below the key 50 level on any price weakness as a sign of continuation lower.

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. Volume profile has remained relatively strong as the market moves higher, this indicates a short term hold and turnover from the market participants. 

Comments from last week: In this shortened week Thursdays high close over the Daily closing price resistance of 5286, is very strong indicator for a continuation move higher.

S&P 500 WEEKLY
Price structure:
Last week’s very strong close sets the index up to test the next level of resistance at 2873.

Indicator:  Relative Strength Indicator
Relative Strength has turned sideways, this would still 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, as a retest below the “30” level must occur.

Comments from last week: 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.

S&P 500 DAILY
Price structure
Daily gaps highlight the volatility of market direction along with the consistent large daily ranges, resistance at 2940 remains in place and may be tested early in the week. The price structure remains a secondary reaction within a major market correction.

Indicator: Relative Strength
With RSI moving towards the “70” level again price momentum is considered very strong. Importantly the observation is RSI has NOT made a new high in line with price, a sign of slowing momentum.

Comments from last week:  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.

GOLD – WEEKLY
Price structure:
Last week’s “shooting star” is a significant rejection of higher prices, traders would look for a retest of the $1610 level in the coming week.
The OPd high of 6 weeks ago has provided the “fake out” signal as price closes below the high of that rejection point. With a previous strong impulsive range showing strong buying the risk is sellers entering the market taking both “Stop losses and “short position” trades.

Indicator:  Relative Strength
After failing to make a new high in line with price the Relative strength has turned lower a sign of weakening momentum. A movement below the 50 level would be a very bearish signal.

Comments from last week: 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 on the coming week should any price weakness enter this very Bullish market.
The underlying PRIMARY TREND remains up.

GOLD  DAILY
Price structure
The $1631 is now an important potential support level in the coming days. Friday’s strong rejection to trade below the highs of early March is a significant sign of price weakness.
It should be noted Friday’s range is large when compared to recent price action. This can be a very strong short-term signal, in this case for near term price weakness back to $1631 daily support or $1610.0 Weekly support.

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 following last weeks “rollover”. A rising indicator would show improving price momentum. 

Comments from last week: 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.

SILVER DAILY
Price structure:
The daily chart of Silver is developing a Bullish flag structure, the $14.75 level would be looked at as a strong support level as this pattern develops. The Daily price trend remain UP. With a continued breakout the immediate price target of $16.50 is targeted.

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

Comments from last week: 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.

AUSTRALIAN VOLATILITY INDEX
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 last 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. 

US DOLLAR INDEX
Price structure:
With the Short retest of 98.45 complete with the “pipe reversal” the higher low is now in place. This is an important level to hold, further gains in this USD value would be bullish for commodities and apply pressure to the FX crosses particularly the Australian dollar. Gold traders should monitor this against the Gold price as an influence in the local miners underlying price.

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

Comments from last week:   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.

WTI  CRUDE OIL
Price structure:
This commodity is news driven.
Oil prints prices into the low $17.0, with more fundamental issues driving the price, storage facilities remain at full capacity. This current chart shows the front month currently coming to expiry. However the Primary trend remains down across all near contracts. The Weekly chart shows the 2nd month ( inset) closing at $25.03 and not making a new low.

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. 

Comments from last week:  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.