Sunday, September 29, 2013

XLF Financials 5-Minute Chart Sideways Symmetrical and Descending Triangle Patterns

Financials are the most important sector affecting market direction as the new week of trading begins. Keystone's trading algorithm, Keybot the Quant, identifies XLF 20.01 as a key bull-bear line in the sand (thick maroon line). Bad things will happen to the equity markets if XLF 20.01 fails. If XLF remains above 20.01, the broad indexes should float sideways and higher. The blue sideways symmetrical triangle was in play on Friday and the sideways vibe continues. The bulls broke out to the upside late-day so it looked like the XLF was headed for 20.13 and higher and the equity bulls win. However, President Obama started speaking at the red circle and the XLF dropped back down to 20.02 before recovering to close at 20.05.

There is also a red descending triangle pattern in play with base line at 20.02. If 20.02 fails, the XLF should drop to 19.95 and equities would be falling in earnest. The brown lines show important sideways channels through 19.99-20.12 and a tighter channel at 20.02-20.09 so price movement through these levels will indicate market strength, or weakness. To boil it all down, watch 20.01-20.02. Under and markets are in big trouble. Above and the bulls keep hanging on floating markets sideways and higher. Listen for any news on the banks overnight since this tidbit of news will likely dictate the movement of the entire broad market come Monday. If another major bank is downgraded, this will be the last nail needed in the financial coffin to send the XLF, and equities, down the rabbit hole. If a major bank is upgraded, or if all of a sudden JPM's woes are looking better, then the bulls will dodge a bullet and send the XLF, and markets, higher. XLF 20.01 holds the key. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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