After today’s move up CL_F should find resistance in the 65.89 to 66 area (the bottom of the cloud and horizontal resistance). So long as this area holds, we still view the move today as consolidation off of oversold levels and a back test of the broken bear flag with a continuation to a target of $62 area. The measured move of the larger Rising Wedge from the $72 levels. 

Gold is at an interesting intersection. Near longer term daily support trend line at backtest of broken trend resistance, a long with a stop loss just below trend support at 1277 or 1276 could offer a decent risk reward trade especially given the general markets are at frothy levels at the moment. Target to look for are a test of the bottom of the underside of consolidation at 1295, top of at 1307 and then 1322. 

All time highs, the Russell has rocketed ahead of the other indexes, except perhaps the Q’s, but what is the risk vs reward trade here. Looking at the weekly the last 10yrs or so have been epic and in the last month and a have the $IWM has jumped from 151 to 167 roughly almost without pause.

So is this sustainable? Is now the time to go long? I say no. Could the Russel grind a little higher? Sure, but what’s the best risk to reward trade here. The daily is in oversold territory with a slight bearish RSI divergence (the weekly is looking like an even bigger RSI divergence will occur this week) and the MACD momentum is starting to slow. 

Looking at this past month push up we can see a pretty clear Rising Wedge pattern. Although it has yet to break and could still grind higher, I feel the time is now to start building a short position versus going long here at all time highs. A measured move of the pattern is 100% roughly so a target of 151 but would need to assess on the way down. 

UPDATE 6/18

The Russell reached a new high today but futures pulled back in early Asian trading after President Trump threatened an additional $200B in tariffs targeted at China. The Rising Wedge formation still remans and small caps are finding resistance at the top of the range while testing and intra day breaking support but then recovering. This is a warning sign as every time a trend line is compromised it becomes weaker. Our game plan is still in tact; sell rallies for the eventual sustained break of support for a measured move down to 1531 area for this trade pattern. Looking at the 4hr chart of small cap futures we can see a clear bearish RSI divergence meaning the strength/validity of each higher high is weakening. 

It has been awhile since we called the rising wedge formation for CL_F with a measured move target of $62. WTI has come a long way but on a weekly basis didn’t really move this week other than up and down intraday. Wags still believes CL_F has been backtesting the broken channel support, now resistance, and CL will continue down to the target price. So far CL has found resistance along the former support and reacted on its first test of the 8day. I view this week as a sideways consolidation for the MAs to catch up after an extreme unwind and now can continue down so long as the 8day acts as resistance. 

Per our trade alert, Heating oil continued down and took out trend support as we predicted. HO is about to get an 8day MA cross of the 21day further adding downward pressure.

Target one is the horizontal support at 2.15 with a second target of the larger channel support coming in around 2.05 currently but will change as time and price change. 

If support is not found there we can pull out to the weekly chart to target the macro channel. Fib levels can also act as support levels and we will have to check the indicators as we approach major levels to determine the extent of the move. 

Since we identified the Rising Wedge pattern the WTI futures have gone from the mid $72 area to a close of 65.71 Friday. Currently, CL is sitting on a trend support line in the area of major horizontal support with the 100day a stone’s throw away.

Our measured move of the pattern break is the 62-62.60 area but given the extent of the move and the converging supports a pause and retest of trend resistance is warranted and or as well as horizontal resistance levels indicated. 

 

The rising wedge we mentioned last weekend broke and like this pattern type the break is quick and big. Looking at the weekly we have a clear rising channel so a test of support at some point is not out of the question.

The measured move of the rising wedge pattern puts CL_F at $62 for that trade. Looking at the daily, CL_F ended right on the 50day and shorter time frames are more than oversold. The 60min time frame has a RSI of 7! So some relief consolidation is in order. CL is now in the box from 69.50-66.5 that it bounced around in so we could see the same type of choppy consolidation between before a push below 66.50 to the eventual trade target of $62. 

That would put CL somewhere midrange of the channel so an evaluation will need to be done there to determine if a further slide to channel support is likely or a bounce back up to the top of the range. 

I believe CL is in the process of topping. There is no confirmation as of yet though but here is why I believe so. Today we have a spinning top daily candle today with bearish RSI divergence at the moment. Looking at the Ichimoku study the tenkan and kijun have flattened out and will pull price towards.

Looking at the 4hr we can more clearly see the RSI divergence and decreasing momentum as well as a rising wedge pattern – my favorite pattern.

Given the extreme Net Long positioning in WTI Crude at the moment, this adds to the extreme unwinding rising wedges typically see already as longs scramble to cover their positions further fueling the move down. 

Now the measured move of a rising wedge is just about 100% putting a target on a break down to $62. Could we grind higher? Sure but given the move in crude YTD and a lot of geopolitical risk already priced in, the risk to reward trade as I see it currently is the short side. If you want confirmation you can wait for a break of trend support to take a position and or add to it on a back test of said trend line if it happens. 

Crude is a highly manipulated commodity and nothing is for certain so use stop losses and be willing to accept the pattern is null if price and indicators are telling you so. In other words, you don’t ever want to marry oil, just date it. 

As if the potential setup wasn’t enough, an hour ago numbers came out of Japan that showed the economy shrank for first time since 2015. The Nikkei futures have had a huge run from the lows 3/26 as seen on the daily chart below. A week ago the NKD broke channel support and has been sliding along the underside which is now resistance and today we have a new daily candle on the other side of this channel support. 

If we look at the 1hr of the past few days there is the potential of a Head and Shoulders pattern with the slope at 22680. The trade setup is a short with a SL slightly above the the right shoulder at 22800. The target profit is a measured move down to 22450. 

$10 in 2 days?  You’re welcome.  LABU pays off when I call it live in the chat.  Risking very little, and gaining a ton is the kind of trade I like to make. 

It’s the kind of trade everybody likes to make, but rarely gets a chance to.  Pharma and bio stocks were in the news on Friday and I still honestly don’t know why.  I don’t pay attention to news because I’m a pure technical trader.  The news I don’t stick around for is earnings and fed minutes releases.  

During news like crude inventories or jobs #s, you will see “big” wicks up and down.  The market will go and take out tight stops around the area that it is in and it will then either a. move in the direction it was going to move to, but faster or b. move in the opposite direction and break the setup.  I trade in the bigger picture. I do have to go into the smaller picture to gauge my entry.  

On Thursday, I bought some LABU at $79 and it reached a good 1st tgt of $84.  On Friday, I saw it held $79…I was going to try again.  

Early morning trades are not something I usually do.  I will usually not trade the first 30 minutes of the market because just like those times I mentioned earlier, the bots are going crazy and trying to pick a direction.  After 30 minutes, everybody picks a direction and goes.  Sometimes though, the market will be set up to be in a position where I know what the direction is going to be before those 30 minutes.  Rarely, does that happen this early.  So I’m in. 

I got in as it was going to my spot.  I wanted it bad and it looked prime for picking.  When you see an opportunity like this, you gotta man up and be ready to fucking go.  You can’t wait because others will take your money.  I love this market because you have to know what you’re doing.  It’s a technical trader’s market.  It’s no longer the bull market we’re used to.  No more ,can an idiot pick a stock and it goes up.  You have to know how to read a fucking chart.  

So the day goes by, and nothing is happening. So fucking boring.  

Wags was OOO most of the day.  Nothing at all happening.  The market was taking a rest from the few days of kicking the bears’ asses.  When I checked back in near end of day to see how LABU was doing.  It was doing okay…setting up.  I took the opportunity and got some more.  

I’m in some more a little higher than what I got in at…and lo and behold.  

Followed by….

Something about Trump and news and whatnot, but whatever.  I was in this before our orange president said a fucking word and then after he shut the fuck up, we took off.  

$7 motherfucking dollars in a fucking day.  Followed by today with another $3.  LABU closed at 89.96 and I was buying that shit up starting at $79.50. All the buy points are above.  I’ll do this from time to time in the chat and just go off and throw in a nugget or 2 of pure genius.  Then shit will go the way I say it does and just respond with one of  my favorite gifs. 

 

-RM