Major Market Ranges for the week of July 23: Falling safes, bull roundups, a gold low

July 23, 2018 11:56 AM

The week of July 23 will likely continue the “low-reversals-consolidations” theme of the prior week (July 16-20). The swing low of gold is in/here, in my opinion (see chart grid below). Do not initiate gold short side positions. Soybeans with a bearish daily & bullish weekly chart and Bitcoin with a 3-day & daily chart sell signal may be the exceptions. Anyone ready to try and catch a falling safe or learn how? Now, it’s a savage sober rave party! This is some serious technical analysis regarding how to identify reversals and invert charts (as in upside down). Therefore, all haters and trading addicts can leave/stop reading.

The good part of my going out of town and writing this article two weeks ago is that readers have a chance to look for and pinpoint some lows/market swing bottoms, place some weekly option spread trades, explore some calendar or diagonal option spreads, and look two weeks out. As an added bonus, I am once again including my reversal/congestion chart grid for readers who want to scalp markets on extremes and learn a universal charting technique that can work intraday, intraweek, etc. I am writing this revision on Sunday, July 22, 2018.

Let’s start by charting the new/continued crude oil short trade Bear Engulf Candlestick signal in a narrow range and supported by Volume Spread Analysis on the 3-day chart. NOTE: This was the chart on July 15, 2018, and it is included for illustrative purposes only because crude oil is a countertrend long bounce into Wave Two of a projected three-wave drop from the monthly chart. Do not short crude oil using call spreads for the week of July 23-27, as it is the opposite short put spread weeklys trade for this coming week per the daily chart signal. See the chart below this article for illustrative purposes and context shown both in normal format and in an inverse/upside-down form so as to better visualize the reversal signal to short oil as a low reversal upside, to better draw lines, and see signal studies on the three-day chart. To view any symbol on Think or Swim in the inverted form, simply place a “ - “ or negative sign in front of the futures or another symbol. If your platform does not allow the inversion of a charted symbol, then use the SCO (short crude oil) ETF, whereby you shall notice the Chaikin Money Flow giving a stronger symbol than the futures contracts. Finally, when I created my own index of Crude Oil Futures, Gasoline Futures, and CRAK (an oil refinery/processing ETF), the Money Flow Index on the 3-day chart is already starting to fly high, and /RB gasoline futures is the most reversing so far in the chart below.

The other exception to low reversals is the S&P 500 whose retest rally toward the highs is technically likely to lose steam and go sideways before reversing into throwbacks down. My rationale/basis for that statement is Fisher understudies are making lower highs, while prices are making higher highs, and this divergence slows down directional trends and can reverse them. Other events, besides news that could instigate a bearish index price move could be the July 17 asteroid fly-by 1.6 Lunar Distances from the earth, as listed on www.spaceweather.com (bottom of page) where one can also see the photo gallery on page top of the Moon-Venus Conjunction.

For the Eurodollar, yen and gold “falling safe” markets, they appear to be on lows hovering on primary moving averages on multiple time frames. These are low reversal opportunities, so please study them using my reversal/congestion grid on whatever time frame you like as you try to identify reversal points/lows. Look for volume spikes/surges, candlestick patterns stops runs/down thrusts on low volume, etc. Bitcoin is on what I believe are lows in oversold conditions flashing a body-body bear engulf, “fake” sell signal from last week on the 3-day chart. Soybeans, also on/near lows rejected the Monthly Camarilla sell pivots, a program trade down to the Buy pivots, where price currently rests. If it rejects the Buy pivots as a program trade upside, it may settle at fair value somewhere in the middle! 

Good luck in the next two weeks scalping upwards or trying to catch some falling safes with some new tools I gave you, hoping the safes don’t crash through the floors below ya! And remember, this underground dj dance party never happened!
 

List/Tracking of Open Option Spread Trade Ideas

ZN (10-year Treasury Notes) Long-monthly chart 121’000, or 122 options trade into Aug.-Sept.

Yen weeklys Iron Condor or long- continue to watch for/trade lows to trade short puts spread or bullish-skewed Iron Condor weeklys or monthly expiry.

Eurodollar Long- monthly chart trade into Aug.-Sept. It may snap down before rallying more.

Gold long- weekly chart trade into Aug., price in low half of hammer tail now, could still short 1235/1230 put spread as of Sunday, July 22, 2018. 3-day chart has a pristine hammer candle, and I believe the swing low of gold is now in/here. (see chart below and calendar/diagonal spreads for 2 weeks expiring two Fridays away are a cheap way to long a call/call spread).

Crude oil short--place weekly long trade to $70 per barrel (middle of narrowed Bollinger Bands) short put spreads or long call spreads trade. Overall it is a monthly chart short trade as core position into the month’s end and into next month with a bounce countertrend this week to comprise Wave Two of the anticipated three-wave drop. (exit your calendar, diagonal weeklys spreads into second week ending July 27 soon early week before the rally-ish sideways pivots take effect). My $70/barrel price could print on Tue., July 24, 2018. See charts below for Fibonacci math.

Soybeans weeklys Iron Condor or Long- Hopefully, traders closed the weeklys Iron Condor last week before price broke outside the high limits (call spread strikes) on Wed. The weekly chart is a long reversal on lows, so another longer-term Iron Condor with bullish skew on strikes or a straight short put spread with 3-4 weeks expiration is the current trade on any intraweek snapdowns. Watch for long points in lows to trade.

Bitcoin Long- I hope the nearly-perfect bear inverted hammers on the daily chart do not cause a stops run higher, nor do I want the bulls who made the strong green up candle to lose in the bear throwback that’s brewing, either. I persist in my opinion that most traders should avoid it, especially when other symbols are giving actual trade signals that make sense.  
 

Predicted Ranges for the week ending July 27: Caution, less accurate due to trending

S&P 500

High: 2862/Low:2793    

Japanese yen

High: 9051/Low: 8970              

Eurodollar

High:1.184/Low: 1.167

Gold

High:$1,267/Low:$1,231

Crude oil

High:$72.75/ Low:$68.00           

Soybeans

High:$8.96/Low: $8.51 (upwardly revised July 22, 2018)

Bitcoin (XBT)

High:$7,600/Low:$7,000      

Note: The technical format change offers numbers likely to be hit/exceeded versus zones.       


Projected & Actual Ranges for the week ending July 20 (as of Friday morning, July 20)

S&P 500 

High:2812/Low:2760, Actual 2818-2780

Japanese yen

High:8981/Low: 8902, Actual 9010-8867     

Euro

High:1.179/Low: 1.166, Actual 1.179-1.162

Gold

High:$1,257/Low:$1,237, Actual $1,245-$1,210

Crude oil

High:$71.33/ Low:$69.90, Actual  $70.87-$66.29

Soybeans

High:$8.76/Low: $8.24, Actual $8.68-$8.26

Bitcoin (XTB)

High:

$6,595/Low:$5,860, Actual: $7,710-$6,325

 


Above Chart: My Daily reversal/congestion grid of the Yen back on July 15 illustrating my compilation method of picking a market low reversal/bottom. The left chart shows ADX average line rising to meet the price subgraph’s low candles, while the bullish DMI or ADX line is low touching the positively-divergent MACD “energy” bars and average line. CCI should show positive divergence or at least the same lows against price’s lower lows. The middle chart reversal/congestion breakout involves Mass Index line creating a hill up/over the 26.5 line (nearly in the above example). Money Flow Index and OnBalance Volume should also show positive divergence. The far right grid should show Wiliams% and Chaikin Money Flow positive divergence and/or threshold crossover. The 45-degree angle pattern I drew on in the Bollinger Band% (middle of far-right understudies) is solely my work and indicates either the halfway down point or the actual low area, based on ancient/sacred fractality or Gann math. In this instance the Yen made a protracted downmove, so this may be the low to which one can hold out their arms to catch the falling safe! This chart grid is universal for all time frames. Source for all charts: Think or Swim


Above Chart: The three-day Chart back on July 15 highlights the crude oil bear engulfing candle with Volume Spread Analysis red dot on top of it and halfway outside Bollinger Bands. This is a short trade signal with fast-Fisher momentum arrows down. A countertrend bounce up to $72.69/barrel may precede another drop to $67.50/$67.00 strikes, at Monthly Floor Pivots S1 level, if one bought a put spread, straight puts, or placed a calendar or diagonal weeklys spread this week into next week’s expiration.


Above Chart: Inverted, Negative-Formatted crude oil three-day chart back on July 15 to visualize the high reversal as a low reversal up to the lower price, charted by adding a “ – “ in front of the /CL symbol in Think or Swim.  The shows crude oil, a shortside trade, as a long or low reversal.



Above chart: The three-day chart of a hybrid index I created (in inverted form) back on July 15 that combines crude oil & Gasoline futures plus CRAK (oil refining ETF). Note the Money Flow Index in the middle of the middle chart already taking off. This is appearing as a low reversal off lows when it is really dropping from highs, because it is visualized upside down with a “-“ symbol before each symbol in the index, with each symbol in Think or Swim separated by a “+” sign, preceding the negative sign. Gasoline and “crack spread” products are a bouncing, which in reality means leading crude oil lower. Upon any bounces in the next 4-5 days July 23-27, one could buy put spreads, sell call spreads, or construct calendar or diagonal or even double diagonal option spreads using weekly issues into the month’s ending week or using monthly expirations, after the long trade this coming week.

About the Author

Trevor Smith is a registered commodity trading advisor who holds four degrees across multiple disciplines. His study of financial markets led to his beliefs that investors can be self-directed and that market moves could be predicted using a variety of technical indicators and mathematics. His website is www.trevorsmithfnp.com. @TrevorSmithCTA