Charts Of Interest

Charts of interest to end the week. It has been a risk-on and risk-off week all in one with option expiry Friday coming up. There are concerns on a number of fronts. Volatility is picking up and some money is being taken off the table and moved to the sidelines as you would expect.

SPY daily could not crack the key resistance for the third time. Ended the week on support.

VXX daily retreated from the key kumo top resistance. That was the third time it was tested with a major event. We have now see volatility advance again towards that resistance. A break above the kumo will be very important. It could well be a good early warning signal. I will be watching very carefully.

UVXY 2hr volatility shorts covered after finding support on the kumo.

SVXY daily the VIX short trade looks to be over for now. There is no conviction and traders are seeing an increase in volatility in coming months. This trade was the most over crowded for mths and is now deleveraging.

MTUM weekly MACD just turning over. See how this goes over the next couple of weeks.

RUT weekly small caps broke down below support. See how it ends the week.

SPHB daily back below the kumo. Headed for a test of key support.

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Copper Update

Just a quick update in the copper trending study. This is a good example of a false breakout. I can’t take a long trending entry here because of my anti-chasing rule. This rule has saved me more times than I can remember. Lets see if it works again this time. There are good fundamentals for the upside in copper but I must follow my method without exception.

Copper daily with price very wide of the kijun sen and MACD crossed down.

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Oil Update

Just a quick oil update. The 50% Fibo level support worked a treat.

See how oil picked up the support off the flat kumo top and flat kijun sen? Fascinating!

Here is the 4hr. You can see how price wants to retrace back to the kijun sen before possible heading lower. Lets see what happens.

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Template Trade

I had to try putting my money where my mouth is and try a real bitcoin trade on my short term template just to prove to myself that it works on anything. The result was excellent as I expected. I was a bit reluctant to show this post because I don’t want to give anyone bad ideas about trading high risk instruments. Even though I can use a guaranteed stop, the risk is still very high. I am not endorsing this type of trading. This post is just to show that my template works on crypto’s, the same as it does on any other trade. Don’t try this at home. This was a risky trade but the outlay was less than 1% of my portfolio so not bad in the scheme of things if it went against me.

An $8,246.00 gain in 4 days on one mini bitcoin contract on IG. About 20 minutes work. Not bad. I will not be making a habit of it. Just to show that it works.

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Tech Watch

Just a quick tech charts of interest. If anything is going to be a warning in the U.S. markets it should be tech stocks. The reason being that so few stocks are doing all the heavy lifting. When you learn logic, they tell you that all salmon are fish, but not all fish are salmon. Unfortunately that type of logic does not apply to the current stock market conditions. In this type of condition you must use deductive reasoning, otherwise known as top-down logic.

“Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.”

NDX weekly never even looked close to being in trouble last week. In strong uptrend. VXN (Nasdaq VIX) is well below the red critical line.

QQQ weekly holding above the pink 9 MA. Would have to get below the blue 20 MA before even looking at bearish evidence.

XLK weekly tech sector fund is in strong uptrend.

FANG composite index v NDX daily on the left. FANMAG stock comparison on the right.

SMH 4hr in a pennant type of pattern.

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Dollar Watch

The inflation numbers for the U.S. are still coming in weak and yet Duddly from the Fed is still pushing another rate hike in December. He said they will likely officially announce the balance sheet reduction in September. Markets are not taking the prospect of a rake hike seriously yet, but that could change when we get more details coming out. The bond yields have been rising at the short end in reaction to the balance sheet reduction, which is not what the Fed wanted. They were hoping it would raise the yield at the long end. It will be interesting to watch bond yields when the details come out. We also have the debt ceiling showdown around the end of September as well so it will be a tense month.

USD Index weekly held support.

TNX daily ten year yield has been below the kumo this week.

IPE daily TIPS had a small breakout above the kumo.

USDJPY daily has rebounded off the key support. Kijun sen and flat kumo at 50% Fibo.

Gold daily was rejected off key resistance. Kijun sen and flat kumo at 50% Fibo.

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False Breakouts

I was listening to a trader the other day on a podcast. He said that he was never wrong with his trade’s, it’s just that his timing was off a bit. That made me laugh but it is true when you think about it. I certainly had that problem myself when I first started trading and I guess I still do to some extent if I am honest about it. One of my biggest issues when I first started trading was in chasing false breakouts. Here are some examples of how false breakouts look. You will notice they all have one thing in common. The price broke out of the distribution into trending, but the kijun sen was flat. There was not enough momentum to sustain the breakout. The first three examples are likely to be false breakouts. The bottom four charts are confirmed false breakouts. If you can get the idea of this it will save you a lot of grief. This applies to any time frame. In this case I have just shown all weekly charts.

These three charts will most likely be false breakout’s due to the flat kijun sen.

These four charts were false breakout’s. As You can see they all have the flat kijun sen in common.

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Crypto’s Update

Quite a week for crypto’s. Some very interesting developments. A lot more to come.

BTCUSD 2hr bitcoin had a good week. The second trending entry was added. This is a classic text book second entry setup. Running a bit rich now. Could expect some profit taking.

ETHUSD daily ethereum is in a text book daily distribution. See the kijun sen at 50%. I am only showing trending entries in this study but could easily trade this on my templates with great success. It trades on my method exactly the same as everything else that I trade.

LTCUSD weekly Lite coin is consolidating. Too far from the kijun sen at this time. Needs to work through for a while before showing a trending entry. I do like it long term though.

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Charts Of Interest

“The time has come,” the Walrus said,
“To talk of many things:
Of shoes–and ships–and sealing-wax–
Of cabbages–and kings–
And why the sea is boiling hot–
And whether pigs have wings.”

~ Lewis Carroll

We have a tense week ahead. There are some important levels that have been tested. There was a lot of short covering in volatility. The interesting thing was that the SKEW index was down which is counter intuitive to what I was expecting.

SPY daily on support.

VIX tested up to resistance to end the week.

VXX daily ended the week right on the kumo top resistance. It could not break out with Brexit or the U.S. election. Could the current geopolitical tensions see it break above the kumo? Lets see.

SVXY weekly crossed below supertrend but held support.

NYMO hit over sold and rebounded. This tends to be a good indicator of over sold levels.

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Copper Update

This is the update on the copper post from earlier in the week. I showed that there was a valid long entry because the daily MACD was still crossed up at the time, but I left it for you to decide if I would take it based on my trading method.

Hopefully you would have said no, because even though it was a valid entry, price was too far from the daily kijun sen. Is that what you got? Hopefully you did. If you understand that it was a low probability trade and it was not worth taking because price was too far from the kijun sen, you have made a big breakthrough.

In the U.S. there is an important inflation number coming out to end the week. This is the CPI, so lets see what it does to copper.

Copper 2hr showing a false breakout.

Copper daily price was too far from the kijun sen to take a trade.

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