Posted by: fortunefaded May 30, 2009
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Hello folks,
Been a few weeks I haven't traded anything in the market. I am still Bearish in the long term but some of you might have noticed a bullish Pennant on the xlf and I wanted to point that out to the rest of the folks. I have stayed away from the Financials since April but the chart is telling me that we might be headed higher in the short term.
If you look at the chart of the XLF below, you will notice that after we hit 13, we have been going back and forth with lower highs and higher lows. Since we are in a short term bull market, this type of pattern will eventually lead to a breakout, most likely to the upside. On the last 10 mins on Friday, we saw a massive rally and breakout of the resistance of the downward sloping Pennant edge.
If we do get a confirmation (that is another hourly candle closing above 12.20) of the breakout on Monday, I will be buying a 1/3 position on the XLF @ 12.50. Depending on the momentum, I might go for the
FAS, which gives triple the gain (and the loss) of the XLF. My target
is 14.00 but I will unload some at 13.50.
Also, I haven't put the daily chart here, but the XLF is going to hit the 200 Moving Average at 13.00 on the daily chart. That is a major resistance. Watch that level carefully.
Disclaimer: This trade is for day or swing traders. For those of you buying and holding for more than a week, I would not suggest to buy this.
If you want to learn more about the Pennant Pattern, here is the link:
http://www.investopedia.com/university/charts/charts6.asp
Peace, FF.
Been a few weeks I haven't traded anything in the market. I am still Bearish in the long term but some of you might have noticed a bullish Pennant on the xlf and I wanted to point that out to the rest of the folks. I have stayed away from the Financials since April but the chart is telling me that we might be headed higher in the short term.
If you look at the chart of the XLF below, you will notice that after we hit 13, we have been going back and forth with lower highs and higher lows. Since we are in a short term bull market, this type of pattern will eventually lead to a breakout, most likely to the upside. On the last 10 mins on Friday, we saw a massive rally and breakout of the resistance of the downward sloping Pennant edge.
If we do get a confirmation (that is another hourly candle closing above 12.20) of the breakout on Monday, I will be buying a 1/3 position on the XLF @ 12.50. Depending on the momentum, I might go for the
FAS, which gives triple the gain (and the loss) of the XLF. My target
is 14.00 but I will unload some at 13.50.
Also, I haven't put the daily chart here, but the XLF is going to hit the 200 Moving Average at 13.00 on the daily chart. That is a major resistance. Watch that level carefully.
Disclaimer: This trade is for day or swing traders. For those of you buying and holding for more than a week, I would not suggest to buy this.
If you want to learn more about the Pennant Pattern, here is the link:
http://www.investopedia.com/university/charts/charts6.asp
Peace, FF.