BULLISH DIVERGENCE
This bullish divergence appearing here again today on XLF, ironically, very similar to May of last year (highlighted left).
Financial Sector (XLF) has seen about 12% corrections since when it peaked at 30ish on late January of this year. In the last few months this sector has been hovering slightly below 27-level, what it appears to be, consolidational price movement.
But what’s more interesting about this price-action is, it is now forming bullish divergence yet again here today.
Yes, this is a premature (early) stage of the divergence and for it to fully confirm, we would need to see the price clearing above 28-level and hold above. If we can do that, I do believe XLF can thrive for the next 5-6 months (of course, minor-term ups and downs along the way).
XLF Daily Chart: April 2017 – Present
STAIR-STEPPING PATTERN
This is what I call, ” stair-stepping” pattern in a primary-term uptrend fluctuation. So basically, what it means is; stock goes up and comes down hits the prior resistance as new support, and it gets back up to hit new highs and pulls back to create new support while hitting the prior resistance; do this over and over again over the course of the multi-year, and you got this primary-term “stair-stepping” pattern.
When this pattern occurs it tends solidify the trend as it accelerates to the upside. When you look at this weekly-chart below you can see that this primary-term uptrend is still in-tact and valid and healthy – thus, we are in a correctional phase in a primary-term uptrend before resuming back up as I believe XLF has bottomed.
My targeting analysis forecasts 34 to 36 level before the year ends upon “confirmation” of the bullish divergence I covered earlier on this post.
XLF Weekly Chart: 2015 – Present
One thought on “XLF: This Chart Implicates The Banks Have Bottomed”
Yes, it should have been, at minimum, 2019 JAN. I am bullish on the banks next 6-8 months even a year. I think GS will stay in a primary-term uptrend next 2 years with corrections along the way.