Black swans or perfect crimes: playing the reversal on the exchange

Traders find hundreds of reasons to explain sharp moves in the market. One of the most popular explanations for rising volatility is the release of those same market-moving news items. These include both the previously known release of statistical data or announcements of the results of various central bank meetings, as well as the appearance of unexpected "black swans" such as terrorist attacks, wars, and so on.

With the first type of news, everything is more or less clear, and traders are even willing to admit that someone is preparing for something and loading liquidity before the news comes out. Although some argue that no one loads horizontal volumes for the move.

With "black swans," everything is much more complicated. It seems that such events are completely unpredictable and that no one knows about them in advance.

Indeed, sometimes it happens that no one knows anything about something. But if you look at when, where, and how players load liquidity, the impression arises that some part of professional market participants, for some reason, load serious volume ahead of future events.

Of course, all this is visible only after the fact and can be explained by the peculiarities of perception, but there are objective parameters in the form of a sharp increase in trading turnover and, as a result, open interest, most often precisely at current market extremes before a future reversal.

In this article I will show how and where liquidity was loaded before one high-profile political murder in the United Kingdom, the Hamas attack on Israel, and the Houthi attack on oil refineries in Saudi Arabia.

It will be interesting.

A week before the BREXIT vote, the very strange murder of Helen Joanne "Jo" Cox took place; at that time she was a member of the British Parliament from the Labour Party. At first glance, what is so strange about it: a crazed ultranationalist and BREXIT supporter killed a fierce opponent of the United Kingdom leaving the EU.

But is everything really that simple? To understand the issue, we need to recall the context.

A week before the fateful referendum, the votes of supporters and opponents of the United Kingdom's membership in the EU were split almost evenly: about 40% on each side, while the remaining 20% were either undecided at that moment or did not plan to vote.

The struggle was precisely for those who had not decided. And an event such as the murder of a significant supporter of keeping Britain in the EU could have pushed some of the undecided toward staying.

Indeed, if an ultranationalist (nationalists were against the EU) commits a high-profile murder, can one really support such a position?

And now let us imagine that political strategists are calculating the possibilities of changing public sentiment. Let us also imagine that the ultranationalist may not have been a very stable person and therefore easily susceptible to psychological manipulation. We may further suppose that there could have been people around him who, not by chance, incited him to such actions.

Conspiracy theory? Entirely possible. But there is one piece of information available to everyone that makes one believe in such a conspiracy theory. And that information is the placement of large volumes on the exchange during the several days before the murder.

Here is the general weekly chart of the pound for almost half a year.

In the week when the murder happened, the maximum vertical volumes of that year up to BREXIT passed through, 764 thousand contracts. At the same time, it is clear that the horizontal volumes accumulated were the largest in 2016, and moreover at the -1 deviation from the average annual price (VWAP), and this is a very strong signal of volume accumulation for a reversal strike.

Moreover, all this happened at the bottom of the annual balance (corridor).

The same is true on the daily chart:

The horizontal filters on the daily clusters are maximal, a signal of dense aggressive loading. From Monday through Thursday, the day of the murder, there was a flat plane with the beginning of distribution.

By the way, the distribution was unloaded only 500 points above the upper boundary of the balance, although the overall range of the move is almost twice as large: you cannot unload all the open liquidity at the best price, but you can do it at a comfortable one.

Some speculators in 2016 were very aggressively loading liquidity for three days at the bottom of the yearly balance, i.e. at the most attractive prices within the annual auction. On the fourth day, a "news item" comes out that moves the market for two days. The unloading takes three days. Nothing illegal, just exchange trading.

Of course, the entire above analysis of money accumulation and distribution does not directly prove anything - it may be a simple coincidence. But it is a coincidence where the trigger for a two-day move of 950 points from high to low was precisely a political assassination. And then...

And then it no longer matters, that is a completely different story. Even if the murder of MP Cox was staged with the aim of changing voter opinion, during those days pollsters could have produced survey results showing that the event had only a slight effect on voters.

And smart money, especially among the old British aristocracy, do not gamble on blind luck: all games and their risks are calculated and worked out in advance, which means they must take what can be taken for certain, and then let happen what cannot always be influenced - the will of the people.

On October 7, 2023, Hamas militants broke through the concrete fence separating the Gaza Strip from Israel and rushed off to kill civilians.

The world was shocked: raped and shot people, the brutal behavior of terrorists, and much else besides. In response, the Israelis declared martial law and sent troops into the Gaza Strip.

The world is shocked again - by the start of 2026, one thousand Israeli lives had been traded for 70 thousand Palestinian lives. As UN chief Antonio Guterres said: "Gaza is becoming a graveyard for children" - according to some reports, up to 20 thousand children have been killed.

And what was happening on the exchange at that time?

Here is the weekly gold chart for 2023. The quote drops sharply to the yearly low a week before the event. At the yearly low around 1840 dollars per ounce, the densest accumulation of horizontal volume takes place.

It seems this is the third or fourth highest indicator value of the year. But if you discard the range of the first half of Monday and calculate the average volume only within the week's balance, you get the highest or second-highest value of the year, followed by a sharp reversal and an exit from the yearly accumulation.

And here is how far the impulse traveled over the remaining three months of 2023. And, by the way, the impulse continues (the beginning of 2026) - gold had already shown 5585 dollars per ounce.

A couple of words about how the accumulation unfolded on the daily TF.

From Tuesday through Thursday they worked very tightly. On Friday they started exiting into the reversal. The Hamas attack was on Saturday morning. And on Monday a gap formed that will never be closed.

A coincidence? Maybe. But who knows more about gold than the Jews? They worked during the week, then Sabbath, and from Monday it was time to count profit and roll over futures for several years ahead.

On September 14, 2019, a Saturday, news agencies around the world were flooded with reports of a drone attack by Houthi forces on the world's largest oil refinery in Abqaiq. Another refinery in Khurais was also attacked.

All weekend the media was ruled by panic, which by Monday evening had miraculously subsided somewhat.

If you look at the yearly oil chart, neither the place where liquidity was loaded is especially interesting, nor are the weekly volumes all that impressive: not the smallest, but far from the largest either. One can only note that they dropped to the middle of the yearly balance before the news and opened at the upper boundary of the balance after the attack.

On the daily chart the situation is a bit more interesting. On Wednesday they moved from the +1 deviation of the month's VWAP to the -1 deviation. They moved sharply in order to spend two days, with fairly low volatility, loading liquidity at a price of 55 dollars per barrel.

The gap between the weeks was about $6.5. At the moment the quote reached $63.5, i.e. the total high-low movement was about 10 bucks. To close positions it took, surprisingly, two days, exactly as many as it took to open them.

Later the smart money gathered buyers' liquidity and went south: the real damage inflicted on the refinery turned out to be insignificant, which means there was no place for panic. But that is another story.

And again let us ask ourselves the question: who knows a great deal about oil? Could it really be the Saudis? They could have been warned about the attack, for example by the Persians, who are actively involved in financing the Houthis. And the Saudis themselves are very fond of this kind of game.

I do not know whether I managed to convince you, dear readers, that political "black swans" can be "perfect crimes."

Or are the coincidences still accidental? Accidental every time. And identical liquidity accumulation patterns in the form of a reversal after aggressive volume accumulation in a range over 2-4 days at the very bottom do not say anything at all.

You decide.