The Aussie stock market index XJO 200 & AUD/USD currency pair has followed the US markets bouncing off the lows hit in late March, rising roughly 1,200 points & 7c from trough to peak. With many on fintwit suggesting the lows in stocks are in & the markets are now starting to price in the reopening of the global economy.

However the price action of both markets suggests this bounce is just a counter rally within a bear market for a number of reasons. Firstly, discussing the XJO 200 recovery so far off the lows are much weaker than the sell off trajectory. The long term 52 day moving average (green line) is sloping down, as well as the price action is currently below the MA which means the index is still in bearish mode.

In addition, the volume during the sell off was much more significant than, the volume average in the counter rally so far (see chart), suggesting caution & hesitation is still present which is a red flag.

Currently the price action in the XJO 200 is still forming higher lows & is also sitting above the 10 day moving average (black line). So I’m not suggesting we will see a roll over this coming week as of yet. But instead I’m watching for signs of a reversal pattern & the start of a roll over emerging.
 
The AUD/USD pair below has similar characteristics to the XJO 200 price action set up overall. However the counter rally in the AUDUSD off the lows has been much stronger than the move soon in the XJO 200. This is evident as the pair has recovered to the 52 day MA rising slightly above it before falling just below it again recently.

Similar to the XJO 200 more recently the AUDUSD has been forming higher lows, however as seen in the chart below, has run into resistance of the downtrend line that started back in Dec19. For the AUDUSD pair to begin to turn bullish, we would need to see a breakout out of the downtrend line, as well as the most recent high formed last week as it moves towards 0.65c, with the price to remain above the 52 day MA line.

Given the overall setup presently with the downtrend & the 52 day MA sloping lower, I’m expecting most likely another retest of the downtrend line towards the red box shown, for a lower high formed. If this occurred this week with a breakout to the downside closing below 0.6320 support this would confirm a reversal of the counter rally seen.

In the meantime we need to wait and see how the price action plays out to determine future direction, including whether the bullish run is maintained on the XJO 200 & AUDUSD, or whether the momentum begins to fade & we see a rollover / reversal pattern follow through in the next few weeks.

The bullish thesis with Aussie stocks & AUDUSD many are suggesting may not be warranted, based on the overall price action setup of the charts, with the probabilities of a roll over to either form a higher low or a retest of the low quite high based on technical evidence. But like all trading we need to allow the charts to dictate the required actions first.

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While Gold has been getting all the attention, as the price of Gold makes multi years highs in 2020, Silver has been stuck in a 4+ month consolidation move, after seeing a massive spike back in Sept 19 when it hit $19.50, from the lows in May of around $14.50.
 
Since then we have had a false breakout to the downside in late Nov (see chart below), which was followed by a swift move to $18.60 resistance. However, it began to drift lower as it formed a tight range with an ascending triangle. This slow drift lower occurred despite Gold showing relative strength over the last few weeks.

With the consolidation building within the triangle, decision time is approaching very soon for Silver, perhaps as soon as the coming week on which way will it break out first. Given the overall longer-term trend, indicated by successive higher lows, together with the longer term 52 day moving average (MA) moving higher (green line), the odds are that Silver is set to break out to the upside of its triangle wedge, first to $18.60 resistance, followed by a higher move towards $19.55 resistance.
 
More importantly based on the last strong move we saw on the daily chart in September 19(see rectangle bar on chart), together with the amount of consolidation since that move, its possible Silver could hit a price target of around $20.60 level in the first half of 2020 at the earliest. This is based on its last explosive move away from the longer term 52 day moving average achieved in 2019 from the current levels of the 52 day MA.

On a more cautious note though, If instead we do in fact see a breach of the triangle towards the downside in the next few weeks, I believe the move will be short lived similar to the false breakout in Nov 19. The reasoning for this is that the global macro environment is very bullish overall for the precious metals with Central Banks easing, printing more QE & plenty of global uncertainty present in the markets.
 
Since there are many bullish factors in play for precious metals, the weekly chart for Silver offers more bullish upside potential over the coming months and into 2021.
Back in July 19, you can see the breakout higher out of its multiyear downtrend. Since then it has formed a number of higher lows, whilst also hitting the $18.50 resistance twice and failing to close above it on the weekly chart more recently.

If the daily charts are correct, and we see a move higher breaking out of the wedge and above $18.50/60 resistance initially, then there is no material resistance level until we reach $20.25 area.

Furthermore, depending on how much consolidation will be required after reaching $20.25 area of resistance, its certainly possible we can see a move towards the $21.80 resistance in the 2nd half of 2020 or sooner. Especially since Silver has under performed Gold’s move in 2019 and so far in 2020.

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The quick answer to the question is…. It depends on which time frame your looking at.

On the daily chart, you can see the last three months has seen the Gold price slowly retreat to lower high’s as the bullish sentiment appears to of faded. On the bullish side the price retreat had been minimal over the last few months. However last week when we saw a sharp drop breaking below the key $1,473 level, finding some support at $1,466 which was also a prior resistance level.

Since the breakout last week, we saw a mild retracement where it tagged the trailing 10 day moving average as well as the downtrend channel & resistance area of $1,473. So, given the strong overhead resistance if it fails to clearly close & hold above this level this week, I would expect a move back to $1,466 support with a short term target over the next few weeks to potentially as low as $1,400 area.

On the weekly chart the bigger picture looks much more bullish & promising over a longer term horizon. The weekly chart shows the breach of the mild pullback in prices over the last three months, which isn’t ideal for the bulls. However, looking at the weekly chart you can also notice the strong run Gold has experienced since June to August, compared to relatively weak pullback in prices over the next 3 months.

Since we saw a strong run the price action on the weekly chart, the price action had stretched too far away from its average distance relative to the 52 week moving average (MA) (green line). Which is why I have been previously calling for a pullback to occur for a few months, in order for the moving averages to catch up to price.

The good news looking on the longer term charts is that we are getting closer to the end of the pullback in prices, where I see a move towards $1,425 support, or worst case scenario a pullback to $1,385. From these levels I would expect buying support to kick in, with an eventual resumption of the longer term bull trend and a move to new record highs over & above $1,900 potentially as soon as 2020.

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Gold has been on an epic run over the last few months. Since it was able to breakout out of the 7+ year sideways consolidation back in early June. The price hasnt looked back. The last few weeks has seen Gold pull back off its 2019 highs as it consolidates the big moves. Recently the $1,488 support was tested however was able to hold just above it.
 
Last week Gold finished at close to the high's of the week as volatility returned to both stocks and bonds on Friday helping lift Gold back to $1,516. Looking ahead for the price action, the strong uptrend is looking bullish for the medium to long term for future price gains for the metal.
 
On a shorter time frame I'm expecting a further consolidation / sideways range for a few more weeks above $1,488 level of support, as the 52 weekly moving average (green line) can catch up some of the distance its made with the strong three month rally. Of course my expectations for further consolidation ahead is based on no global flare ups that could see another massive move in the price of Gold. For example if the Repo overnight funding market in the US worsens and the spreads start to spike again then its possible we could see Gold move back to the 2019 highs in the next few weeks.

Assuming there isn't any such events on the financial markets and Gold has had a chance to consolidate further in a sideways range of prices, then I would then expect to see a move some time in October towards $1,560 resistance.
 
On a longer term horizon for Gold for the remainder of the year I expect Gold to make new 2019 highs as it gets closer to its old record highs around $1900. Given the growing use of QE from Central Banks to tackle the slowing global economy I expect Gold to make new nominal highs and take out the old high in 2020. However for the short term we need to be more patient as we get much needed consolidation for the next leg higher.

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Crude Oil has broken out of its downtrend, jumping over 8% today after the Geo-political event over the weekend has effected a material amount of global supply of Oil. At this stage its unclear how long it will take to get supply back online.
 
So given this terrible event occurring does this mean we will see Oil retest its old highs over $100 USD a barrel? The short answer is it depends on what happens next. Will there be a retaliation for the attack and what will Oil producing countries do in the short term to deal with potential supply issues. 
 
So What Does The Charts Say?  
 
The charts are showing us that Crude Oil is clearly outside of its downtrend line sitting above its 10 & 52 day moving average indicating its now in a bullish stance. Currently its sitting just above $59.15 support after earlier breaching multiple resistance levels. If $59.15 support can hold today and for the remainder of the week, this would be quite bullish for Oil.

However if Geo political events settle down for the remainder of the week, its quite possible we see a move back down to $57.30 support. Given the quite large rejection tail today, it appears for now at least the market doesn’t see considerably higher prices. But this can change very quickly if events escalate globally.
 
If we were to see a move above $60.90 resistance, that can hold these levels, then its certainly possible we will begin to move closer $63 levels and higher. Its important to note that global demand for Oil is slowing so any moves higher will be short term in nature based on disruptions in current & potential future Oil supplies.
 
So at least for the next few weeks its likely to be quite volatile for Crude Oil markets as the market digest all the available information that comes online.

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Last week we saw the S&P 500 finally breakout of its sideways channel direction (green box) as news reports that China & US are back to talking again and are preparing to meet at the end of the month. The theory is that hopefully after over a year they somehow come to some sort of agreement. However interestingly the recent rally we saw last week for US stocks has been on below average volume as shown on the chart. Whenever I see this it tells me to be weary of any move seen. In other words its a red flag and can’t be relied upon as a trader.
 
Looking at the daily chart of the S&P 500, we can agree the positives is that it broke out of the box and is now trading above the 52 day moving average, which are bullish signals. On the other hand the price action has been hitting the original uptrend line, however as a resistance level rather than as a support level as seen back in June 19. Add in low average volumes overall on this spike higher and the weight of evidence isn’t totally in favor of the bulls.

Looking ahead for the week for the S&P 500 index, I'm looking to see if the price action can finally jump back above the long-term uptrend which it hasn’t been able to achieve yet. If we see a pullback this week to the support area of 2,940 and hold, this would be the ideal for the bulls. If it was then followed by a strong move higher with above average volume back inside the uptrend line either this week or next then I would agree that the S&P 500 will be heading for new record highs in coming weeks and months.
 
Given that the ECB are meeting this week to most likely introduce more QE & other stimulus, followed up by the FED next week for the FOMC. These two big events should keep US stocks elevated. However watch out for a wild card (Ie Trump tariff / trade tweet) and a move back under 2,940 area and back inside the green box this week, even though this is an unlikely scenario.

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The Nasdaq 100, which is the strongest of the main US stock indices finally broke its 2019 uptrend on Friday, as Trump was able to feed massive uncertainty in the markets, as investors lost complete confidence in Trump & most likely any hopes for the US to avoid a recession.
 
Leading up to Friday's shocking sell off in US stocks, the muted rally we saw during last week of small moves higher was in fact made on terribly low volume, which is considerable below the daily average.
 
The low volume during a move higher in trend, was similar to the slow run higher in July 19 to new all-time highs. This was also just before a strong sell off on increased volume that occurred. If you’re paying attention this would have been a big red flag for traders & investors.
 
Another red flag for the Nasdaq 100, is that we have confirmed a lower high and lower low signaling a change in control from buyers to sellers in the daily charts.

Looking ahead for the Nasdaq 100, the support area of 7,400 is the last final confirmation required from the market before we can confirm a change of trend. Therefore Monday's trading is super important for short term direction for the Nasdaq especially if we clearly close below this area. A breach of 7,400 support would indicate the next support level of 7,025 for the Nasdaq 100
 
Lastly unless there is some miracle from the Central Banks with more intervention, and we see a big shift in bullishness. With the Nasdaq 100 somehow jumping back above its uptrend line and above the 52 day moving average (green line).  We are likely looking at the start of the end of the bull market in US stocks.

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Apple share price finds itself in a rather interesting position on the weekly chart. If you take a look at the price action from the start of the 2019 you will notice its uptrend, with the price above the 52 weekly moving average, with higher lows formed.
 
However if you step back on longer time frame and view the chart you will notice that since December 2018 when Apple broke below the long term uptrend line, it has failed to move back above this trend on a consistent basis. In addition the price action has been bouncing off a large triangle pattern on the weekly chart for a third time.

If this were to fail and the price action broke to the downside this would be quite bearish for Apple & US stocks as the weighting of Apple would drag down the Nasdaq & S&P500. When observing triangle patterns the price action usually breaks in the direction of the trend, so this means the odds suggests that Apple either this week or in the coming weeks will break the current triangle pattern to the upside.

To confirm this a clear break of $212 resistance would need to occur. If this happens we will likely see a move towards $228 resistance. Based on the likely odds, this would also mean that the SPX index would hold its most recent bounce off the 200 day moving average and confirm a higher low, with a likely move to another higher high and new all time record high in the SPX.
 
Therefore the next few weeks will be critical for Apple investors & US stocks overall and likely dictate the trend going forward in the medium term for stocks.

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The Aussie stock index XJO last week broke a key uptrend that had been in place since the start of 2019. The index was able to see a recovery during the week, however unlike the US stock indices the XJO index did not recover back above the uptrend line that it failed.
 
So we can confirm that Aussie stocks are looking weak at the moment. However, is it time to go bearish with the latest price action? When it comes to trading, we have to be fluid and open to new information as it comes to make good decisions on likely direction.
 
We have covered the breach of the uptrend, however there are other problems for the bulls. Its sitting below the 10 & 52 day moving average, telling me stocks are under pressure & have lost momentum. The gains we saw since mid week were relatively small moves higher relative to the down days we saw leading into the breach of the uptrend.

Lastly, another interesting red flag for the XJO I covered with members after the Friday close, is that we have closed below the 10 week moving average for the first time in this uptrend rally (see chart below). This usually means that a trend has either ended or is about to end when I see this.

Going forward from here we could be witnessing a change of trend, however for now I have not gone bearish. For my stance to change and go bearish I need to see a confirmed lower high formed, with the 52 day MA turning down. In addition the price action ideally stays below the uptrend line. Lastly if we see a close below the lows recorded last week then I will be bearish Aussie stocks.
 
So for now we have to go with a day by day approach as we wait and see if the other conditions are satisfied. Especially as its possible with earnings season occurring this month that we resume a bullish structure.

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