Black and White Technical Report: The Week Beginning 24/01/2022

All major Indices have failed to find Weekly support, with the Nasdaq currently in a defined capitulation move lower.

US futures continued to trade lower in the final trade on Saturday morning.

I wrote for many months the XJO may be forming a broad top, last week the Index posted the lowest close since May 2021.

The Relative Strength readings for Global Indices has moved below the key 50 levels as price momentum turns negative.

West Texas Intermediate remains within a Bull market move with the next long-term price target 2014 high.

Gold and Silver continue to range trade; however, the charts now show an early bullish development, that may still take two to three weeks to confirm.

XJO WEEKLY
Price structure:
With the Weekly closing at the lowest value since May 2021 and below a key level of support, a retest of the 6900 level has come into play. Last week marks one of the largest range down close bars since February 2020, this type of range will often follow through to lower prices as the sellers have remained in control to the close.

Indicator: Relative Strength 14
Relative Strength has turned sideways to down, as the reading has moved below the 50 levels, the next move in the RSI will be telling should it move lower to the 30 levels. The Relative Strength Indicator reflects price momentum and would be expected to move sideways in times of consolidation.

Comments from last week: From the still in play OPu (Outside period up close) of 2 weeks ago the Index last week set an IP below the 7530 level, only continuing the overall 30 plus weeks of consolidation. With the new Trendline in place, a break of this line would confirm a bearish view and potential retest of 7200 level.

XJO DAILY
Price structure:
Last Friday’s large range with the close below 7200 clearly shows the sellers entering the market following last Thursdays “hammer bar” indicating some support. Given the current Daily directional momentum, further declines should be expected early this week.

Indicator: Relative Strength 14
The Relative Strength Indicator (14) reflecting the underlying price momentum has moved sharply lower indicating a loss of upward momentum. Relative strength should be monitored for an early divergence signal in the coming weeks.

Indicator: VOLUME
Trading volumes have been increasing during the past week leading to Friday’s capitulation. This marks the second significant increase in trading volume on a down close bar. (Also Friday 2 weeks ago)

Comments from last week: Persistent rejection of the 7492 level has set another pivot reversal, with the retest of 7370 underway. The past 6 trading sessions have set a small consolidation pattern, the key is the pattern follows the large range pivot from 2 weeks ago now setting up a further decline early this week.

S&P 500 WEEKLY
Price structure
Open to close with the seller in control for the close of the week. The OPd of 2 weeks ago can pass a very powerful shadow over price action when found in a high price area. Weekly support remains at 4320, however, at the current rate of decent a retest of 4050 could be expected. On a much broader scale not shown on this chart, the S&P 500 may eventually retest the
breakout level from August 2020 around 3300 points.

Indicator: Relative Strength Indicator 14
The sharp movement below the key 50 levels would signal a loss of momentum and potentially further price weakness. Price movements are considered positive with a reading above the 50 levels, with this reading below the 50 levels the Index has accrued more loss points than gained in the lookback period of 14 (weeks).

Comments from last week: The narrow open closing range shows indecision, the OPd described last week remains in play as the top price marker. With many Tech stocks also listed in the S&P, this Index remains vulnerable to a further breakdown to retest 4545 and lower. It still remains a concern the RSI has not made a new high. The relative strength indicator has again moved to a Bearish divergence signal. The divergence “sell” signal will occur with a movement below the 60 levels (red line).

S&P 500 DAILY
Price structure:
Making a clean move through the Trendline and daily 4545 resistance (September) – support (December) and closing within 2 points of the low. With the 1 st Gap closed the 2 nd Gap is in play, immediate and the first level of Gap support may be 4372. Price action should be monitored for an immediate reaction if this level proves valid. The next real support remains at 4240.

Indicator: Relative Strength 14
Relative Strength Indicator (14) has turned lower and is below the key 50 levels. A further lower close below the 30 levels would alert traders to further decreasing price momentum. A potential divergence signal may develop at these levels, being where the RSI begins to rise on what seems declining prices.

Comments from last week: The pivot reversal at the 4720 level has set a “lower high” in this daily chart, although Friday set a Gap open Buy signal the large range bar from the pivot pattern will be the key resistance this week. The S&P remains within A Daily range from 4545 to 4818. The Trendline is now confirmed with the 3rd data point.

NASDAQ DAILY
Price structure:
The lowest close from July 2021, a strong momentum move is underway. Last Friday showed early buying to close the daily opening Gap with the seller closing the market below a significant support level of 14535. The Nasdaq has entered into a Daily downtrend currently shown as an a, b, c pattern, this type of price action can be a bullish setup, however, should a Daily relief rally occur, a further decline below the “c” point will signal a STRONG bear market move.

Indicator: Relative Strength 14
Relative Strength has moved below the 30 levels, indicating the very weak and or negative price momentum. This is the area to monitor for an early divergence signal in the coming weeks.

Comments from last week: The early week break below the 15530 level was met by immediate buying the short rally was again met by further selling (b) setting a pivot reversal. This may develop into an a, b, c type retracement, the result would be a new low below the tentative trendline. This would also confirm and set a Daily downtrend in place. In the immediate, Friday set a Gap open Buy signal, a new high above point “b” would be an important development. Relative Strength Indicator moving below the 50 levels is a sign of negative price momentum, however, the current reading swinging around shows waning momentum and should be monitored for a move lower as a precursor to price breaking to lower support levels.

USD Spot GOLD – DAILY: No Bull market.
$USD Gold made a very strong move last Wednesday, but no follow-through. Current price action indicates a new Bullish flag may be developing at this important $1834.0 level. USD Gold remains within a large consolidation area, with the current breakout over $1834.0 the potential is for a Trend to develop a sharp move to $1876.90 could force a significant short cover to see $1916.40 tested.

Indicator: Relative Strength 14
Relative Strength shows a reading above the 50 levels and turning lower, as upside momentum continues to be capped and prices consolidate.

Comments from last week: Gold is building a small consolidation pattern below the key $1834.0. Given recent support at the $1788.0 level, a potential higher low is in place. A breakout over the $1834.0 level would confirm the formation of a Bullish trend change and a retest of $1876.90. Historically Gold does not do well in extended equity Bull markets, also historically Gold will also decline on an initial equity market decline.

SILVER DAILY
Price structure: No Bull market.
With a very similar picture to $USD Gold, Silver has confirmed the HL point as trading has occurred over the recent highs of $23.50. The breakout above the Downtrend line is an important development with the current inside bar (Friday) being the retest of the Thursday breakout. The next real resistance shows at $25.52.

Indicator: Relative Strength 14
Current Relative Strength is moving above the 50 levels and now turning sideways shows price momentum is simply fluctuating, typical of consolidation patterns. A continuing move above the 50 levels into the 70 levels would be very bullish in the short term.

Comments from last week:
Silver again rejected the $23.50 level with an Outside range last Friday. Further consolidation is the best outcome. A closing price above the $23.50 level would be a very Bullish move and potentially force a short squeeze. The recent “higher low” above the $21.60 level has been an important development for a Bullish trend to begin.

AUD GOLD DAILY
Price structure:
A weaker $AUD and increasing $USD Gold price has the $AUD Gold value moving out of the descending pattern and trading over the important $2541.0 level. $AUD Gold remains within a UP trend, with further gains in $USD Gold, this may trade through the 2600 level. This remains a very positive setup for the Australian Gold Producers. Junior Gold players remain news-driven around exploration results and production costs.

Indicator Relative Strength 14
Relative Strength moving sideways has turned higher and remains above the key 50 levels this shows positive momentum, this ranging movement is typical with consolidation areas.

Comments from last week: With 3 low points set within the descending pattern current price movements have staged a minor breakout as a new “pivot point” is set. The first resistance point maybe $2541.0. Underlying momentum within the $AUDXAU price will reflect on local producers, in this development, the expectation is for positive price movements.

COPPER DAILY
Price structure:
No follow-through from the “shooting star rejection bar of 2 weeks ago, is a very positive outcome. Last week showed an inside range (IPu) indicating a market in balance, a higher breakout
from this range may retest the highs of $4.80. Copper remains within the confines of a UP trend, this consolidation (secondary movement) shows signs of an ascending pattern above the Trendline.

Indicator: Relative Strength 14
Current readings swing above and below the 50 levels reflect the current consolidation underway. The key, for now, is the RSI remains above the 50 levels as a reflection of ongoing and any
positive underlying positive price momentum.

Comments from last week: Continued rejection at the $4.50 area has set a weekly “shooting star”, however, the closing price remains above the key Midpoint $4.33 level. Copper remains within a well-defined consolidation window between $4.0 and $4.80

AUSTRALIAN VOLATILITY INDEX
A sharp rise to an 11month high in volatility resulted from the bearish move in markets. Volatility is rising hence the forward price of protective ETO’s increase in price as the “Vega – Delta” component increases. This will continue to place pressure on local equity prices. The XVI is the difference between the 3-month forward pricing of ETO Options against the current month. As markets anticipate events, the forward priced option volatility changes, hence as forwarding 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: The mid-week announcement by the US Federal reserve saw a risk-off event taking the XVI higher as the forward price of PUT insurance increased. The close has remained inside the “bullish for equities” zone, a further breakdown in the value of the XJO would push the XVI higher.

US DOLLAR INDEX
Price structure:
Good support was found after last weeks comments with the 95.70 back in play as resistance. Look for a short retracement before a move higher within this current Primary UP Trend. With an outcome trading higher a move to 96.93 resistance looks the better outcome.

Indicator: Relative Strength 14
The Relative Strength has turned higher in line with price movements and should now be monitored for a Bullish divergence signal as the current reading remains below the key 50
level.

Comments from last week: The current breakdown below the recent secondary consolidation support level of 95.70 appears to be unexpected given the resulting move was the large range bar under 95.70. The build-up of longs seemed to be liquidated as stops were hit. This retest is an important development within a Primary UP trend, however, a breakdown below this current support level would target 93.50. This level should be monitored for support as the price movements has set an Outside range on Friday, this type of bar is often the precursor to a reversal, in this case, higher.

WTI – CRUDE OIL
Price structure:
This commodity is highly news driven by supply-demand. The current retest of the $84.25 closing high from 13 weeks prior has the potential to reject this level, this week’s Fake Out (FO) has closed below the middle of the range high to low. WTI Oil remains within a Primary UP trend, however, a retest and hold of the $75.20 level would confirm Bullish support for a move to $100.0

Indicator: Relative Strength 14
The current price strength has not produced a new high in the RSI, this will now be monitored for a developing divergence signal, although it may take many weeks to develop. The Relative Strength crossing the 70 levels is not a signal of over brought as the reading can remain strong for many weeks.

Comments from last week: Last week produced a bull market move on an expanding range with a new closing high over recent resistance. The June 2014 high remains the price target, the current consolidation range from $61.80 to $84.25 ($22.45) extended to give a price target of $106.70. WTI Oil remains within a Primary UP trend, this should underpin the Australian Oilers WPL STO.