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The Equities Wedge At The Edge – Front And Center

We continue to alert our followers of the extended Wedge (Flag or Pennant) formation that has setup over the past 16+ months in most of the US major indexes.  The reason these are so important for skilled technical traders is because the Apex of these formations typically result in a violent price move  that may result in a dramatic profit opportunity (or massive risk event).  The most interesting facet of the current Wedge formation is that it is happening just 12 months before the US Presidential Election cycle.

It is our believe that a major price reversion event will begin to take place over the next 2 to 6+ weeks and complete near the end of 2019 or into early 2020.  This reversion event is and continues to align with our super-cycle event analysis from earlier this year.  Our researchers believe this reversion event is essential for price to establish “true valuation levels” and to begin a renewed future price trend.  We believe that trend will begin between June 2020 and August 2020 and will result in a strong bullish price trend.  We also believe this bullish price trend in the US stock market may last well beyond 12+ months – well into 2021 and beyond.

CUSTOM TECHNOLOGY WEEKLY INDEX CHART

This Custom Technology Index chart highlights the Wedge formation that is one of our main concerns.  The Technology sector is one of the most heavily weighted sectors in the US stock market and the one that typically has the highest price to earnings multiple.  Over the past 5+ years, billions have poured into the Technology sector chasing the rally and the security of the US stock market/US Dollar.  A breakdown in this sector (like the DOT COM crash) could be devastating for the global markets.  As you can see, the price is already very close to the lower price channel and could breakdown within the next 2 to 5+ weeks.  Pay attention to weakness in the NASDAQ and/or the technology sector overall.

MONTHLY S&P 500 CHART

This S&P 500 chart highlights the rising Wedge formation that is set up and nearly complete.  This Monthly chart also highlights the extended volatility within the global markets compared to levels prior to 2018.  It is our opinion that the Apex of this Wedge will result in a breakdown/price reversion event targeting levels below 2600 on the SPX.  This reversion could extend to levels below 2000 on extended price weakness.  Our opinion is that the bottom will form sometime between December 2019 and April 2020 where a new Wedge formation will setup before reaching the Apex and starting a new upside price trend near August/October 2020.

We prepared for a very volatile price rotation/reversion event as these Wedges reach their Apex moment.  Skilled technical traders should be able to find lots of opportunity for profits over the next 6+ months with these big price rotations.

WEEKLY US DOLLAR CHART

The US Dollar will likely rotate within the Magenta price channel as this has continued to provide very clear price support over the past 20+ months.  We don’t believe the US Dollar will decline by more than 5% to 7% throughout the reversion event.  The fact is that the US Dollar has regained a level of dominance within the world and the US Dollar may continue to strengthen for many months into the future.

Remember, these reversion events are essential for proper price exploration and future price trends to establish.  They are fundamental to all price activity.  A healthy price rotation will allow for future trends to establish and mature well into 2021~2024.  The current Wedge formations must complete and the Apex rotation must happen in order for price to conduct “true price exploration” and “true price valuation”.  From these levels, price will establish a new price trend that may continue for many years into the future.

CONCLUDING THOUGHTS:

We strongly suggest all readers consider the risks of their open portfolio positions and take steps to protect against any unwanted risk exposure.  As we are suggesting, we believe the Apex event will begin within 2 to 4+ weeks – possibly sooner.  If you want to know what we are advising our clients about this event, visit www.TheTechnicalTraders.com to learn how we can assist you.

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As a technical analysis and trader since 1997, I have been through a few bull/bear market cycles. I believe I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital. The opportunities are massive/life-changing if handled properly.

Chris Vermeulen
www.TheTechnicalTraders.com

Fibonacci Support May Signal Bounce in Oil & Equities

We want to take a moment to point out that a Fibonacci 100% price move setup may prompt an upside price swing over the next few days and weeks.  Many traders fail to identify this setup and get caught up in the current price trend.  This happens because we lose focus on the fact that price always moves in segments or legs – from one peak or trough to another peak or trough.  The process of creating these segments or legs is usually structured in these types of Fibonacci price increment, and Fib targets I have personally found to be the most accurate for spotting profit taking and turning points.

We provide two very clear examples of this type of setup and how it has worked in the past.  We urge all traders to understand there are many examples of larger Fibonacci price expansion legs throughout history.  These examples of the 100% Fibonacci price leg are unique instances of price movement and, after confirmation of a base/reversal, can become very valid trading signals.

This first example is the ES (E-Mini S&P Futures).  You can see from this chart the earlier examples of the 100% Fibonacci price legs working in the October 2018 downward price move. The current downward price legs have set up a perfect 100% Fibonacci price expansion leg and we believe support may form near $2732.

We would normally wait for some type of price confirmation that this level is going to act as support – for example, a solid reversal bar or Japanese Candlestick price pattern.  After confirmation is achieved, a price rotation equal to 60% to 95% of the last downward price leg can be expected.

This next example shows Crude Oil and the most recent downward two Fibonacci Price Legs.  The first resulted in a very quick upside price rotation (highlighted by the green arrow near May 20).  The second downside Fibonacci Price Leg just ended near $53.30.

It is our belief that Oil will find support near this $53.30 level and rally back above $56 from these lows.  The only thing we are waiting for is some type of technical price confirmation of this bottom setup and we can expect a 4% to 8% upside price swing in Crude Oil.

Over the past 21+ months, we’ve highlighted some of the best tools and techniques we use to find great trading signals.  This one technique, the Fibonacci 100% Price Expansion Leg, is just one of the tools we use to find trades and targets for our trade alerts for members.

The more one understands how price works and how the markets operate as a Symphony of price actions, one can find opportunities for great trades almost all the time.  Skill and experience make the difference when deciding when to trade and what to trade and that’s what we provide.

More eye opening charts on currencies and gold here

We’ve now shown you two different price setups using Fibonacci price theory and the only thing we have to do is wait for a technical price confirmation before finding our entry trade.  We’ll see how this plays out over the next few days and weeks.  Remember, we are not proposing these as “major price bottoms”. They are “upside pullback trades” (bounces) at this point.  A bullish price pullback in a downtrend.

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Chris Vermeulen