Best Sectors to Trade for July $XLK

Best Sectors to Trade for July  $XLK.   Let’s look at seasonal patterns for the month of July and then see if the charts support the patterns.

Below is the top sectors provided by www.alerttrades.com (no charge for the data).

2016-07-05_sectors

The $XLK Technology ETF is the top seasonal sector.    Here is the individual data for the $XLK.

2016-07-05_xlk

It has 89% probability of being Bullish for the month of July but the reward/risk is not good.   The average reward is 3.3% and the draw down is 2.4%.     This gives a little over 1:1 reward/risk.

First, we have to verify the sentiment is bullish on the charts.   Just because the seasonal data says it has a high probability of being bullish doesn’t mean we will go bullish.

Below is the weekly chart provided by eSignal.  The instrument is going through a bullish consolidation pattern.    The support at 41.32 is holding the instrument in a bullish mode.

2016-07-05_xlk_w

Now that we know the long term view is bullish, we need to find the iMTF™ support.    We need to look at pull back entry for a possible trade due to the bad reward/risk presented by the seasonal data.

Below is the daily chart.   The sentiment is bullish with a major support at 42.63 and 42.81.

2016-07-05_xlk_d

Below is the 240m chart.  It has a major support at 42.63 and 42.43.

2016-07-05_xlk_240

 

Below is the 60m chart.  It has a major support of 42.72 and 42.63.

2016-07-05_xlk_60

 

Analyzing all the charts, it clearly can be seen that the iMTF™ is at 42.63.    On the 60m it is the “boundary” condition support on it being bullish sentiment or consolidation.     Therefore, an entry can be placed at iMTF™ on a 60m time frame.

If you would like to learn how to trade like an institutional trader or learn more about our multi-timeframe email alerts, go to www.ichimokutrade.com or email us at info@eiicapital.com

EDUCATIONAL USE. Commodity Futures Trading Commission, Forex, Futures, Equity and Options Trading has large potential rewards, but also has large potential risk and may not be suitable for everyone. You must be aware of the risks and be willing to accept them in order to invest in these markets. Do not trade with money you can not afford to lose. This is neither a solicitation nor an offer to Buy/Sell. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this document. The past performance of any trading system or methodology is not necessarily indicative of future results. All information provided on the Blog is for educational purpose.

About the Author Manesh Patel