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by Arthur Hill
After forming a rising wedge over the last two months, the financials SPDR declined sharply and is dangerously close to a continuation breakdown.
Position: Hold
Arthur Hill
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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ADXR
Moment Of Truth For XLF
09/12/08 09:00:14 AMby Arthur Hill
After forming a rising wedge over the last two months, the financials SPDR declined sharply and is dangerously close to a continuation breakdown.
Position: Hold
| Figure 1 focuses on the rising wedge. The financials SPDR (XLF) bottomed in July and retraced around 62% of its prior decline with a rising wedge advance over the last two months. XLF peaked this week and declined to the lower trendline over the last four days. A break looked imminent with a weak open on September 11, but XLF recovered by the close and the trendline is holding for now. |
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| FIGURE 1: XLF, DAILY. This SPDR bottomed in July and retraced around 62% of its prior decline with a rising wedge advance over two months. |
| Graphic provided by: TeleChart2007. |
| |
| The bottom indicator shows the positive directional indicator (+DI) and the negative directional indicator (-DI). These are part of J. Welles Wilder's average directional movement index (ADX). As their names imply, +DI and -DI can be used to determine direction. A bullish bias exists when +DI is above -DI and a bearish bias when -DI is above +DI. Overall, these two have been trading flat the last few weeks and I am looking for an upside breakout for the next signal. A +DI breakout would be bullish, while a -DI breakout would be bearish. |
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| FIGURE 2: XLF, DAILY. A trading range formed after the July surge. |
| Graphic provided by: TeleChart2007. |
| |
| Figure 2 focuses on a trading range that formed after the July surge. XLF has a support zone around 19.5 and a resistance zone around 23. With the ETF trading at support, a big test is at hand. A break below support would also reverse the rising wedge and point to lower prices. This would also likely to be accompanied with a -DI breakout. Such a combination would be bearish for XLF, and this ETF is at its moment of truth. To hold or not to hold, that is the challenge. |
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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