Am I at fault? Can I get my security deposit back from Landlord?
The landlord is wrong, and he should reimburse you the totality of the security deposit.
Clauses #1 and #16 would entitle the landlord to deduct from your security deposit only the portion of the 7-day period that is not already covered in the payment you made for 1st week's rent, which according to clause #1 starts on Sunday July 29.
If I understand correctly, you signed the contract (and paid) on July 27, and then gave your 7-day notice on July 28. Since you paid an additional amount for Saturday July 28, then your 1st week's rent payment actually covers the entire 7-day period of your notice. Therefore, the landlord should reimburse you the entire security deposit.
The contract nowhere indicates that the count of [post-notice] 7 days starts after the current rent-week elapses. But even if it did contain language in that sense, the dates you mention render that hypothetical clause void.
Lastly, clause #16 refers to giving a written notice, which is what you did by sending him the text he obviously read and understood. Therefore, his statement that "you did not provide proper notice of moving out" clearly is false.
What should I do?
If the landlord insists to retain the security deposit, your option is to file a complaint in Small Claims court (I don't know whether this has a different name in PA). Depending on PA procedural law, you and the landlord might be cited for mediation prior to being assigned a court date.
A process in small claims court is pretty straight-forward, but only you can determine whether the hassle of attending mediation and court hearing is worth. If anything, it (1) certainly gives you some [minimal] exposure to litigation, and (2) teaches the landlord to abide by the very rules he drafted in the contract.
8/30/2018: Edited to address OP's follow-up question of whether section 250.512 of the Landlord and Tenant Act precludes recovery of security deposit (see comments)
After analyzing the statute you found, Pennsylvania courts have still held that a tenant's failure to provide a new address does not preclude recovery of the security deposit.
See Adamsky v. Picknick, 412 Pa.Super.Ct. 544, 549 (1992):
we find the lack of notice argument is tenuous at best since appellant's reason for withholding the deposit was not because he did not have appellees' new address, rather, he withheld it because he maintained there were damages for which he should be compensated.
That conclusion is squarely applicable to your situation. The landlord's only pretext for withholding your deposit is his inaccurate statement that "you did not provide proper notice of moving out", and for that matter he refers to nothing else than the rental agreement. The rental agreement nowhere requires you to provide your new address.
One decision that does not constitute legal precedent but still might help persuading Small Claims court in your situation is Back v. Taylor, 19 D. & C. 3d 606, 609 (1980). After citing section 250.512(e) of the Landlord and Tenant Act, the court states:
That section sets forth certain guidelines as to when tenants can obtain double recovery. Defendants have only sought recovery of the deposit and therefore, the above cited section does not apply.
(emphasis in original)
Unless you were pursuing double recovery (see item (c) of the statute), it would be very questionable --to say the least-- why a [Small Claims] court should decide your dispute any differently than in Back.
Another non-precedential decision analyzing the same statute is Shoemaker v. Henry, 35 D. & C. 206, 209 (1984). Also in the context of double damages, the court stated:
We cannot believe the only purpose [to require a tenant to provide his new address] was a negative one, that is, to cancel a right to double damages for failure to comply. A more rational explanation is that its purpose was to provide a landlord with an address to which the damage list could be sent.
(brackets added)
The statute apparently was enacted well before the prevalence of electronic communications. If your landlord has any way to send you a "damage list" (as it seems to be the case insofar as he replied to your text), then the rationale in Shoemaker should apply in your situation. If you are not even pursuing double recovery, then it would be unavailing for the landlord to cling to the language in item (e) of that statute.
Therefore, you are definitely entitled to your deposit even if you did not provide to the landlord a new address. It is up to you whether you want to go for double damages, in which case the decision in Shoemaker might or might not be persuasive in Small Claims court. Beyond that, the Adamsky opinion constitutes legal precedent which favors your position.