{"id":145971,"date":"2019-04-17T08:31:13","date_gmt":"2019-04-17T12:31:13","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=145971"},"modified":"2019-04-17T06:32:43","modified_gmt":"2019-04-17T10:32:43","slug":"watch-the-financial-sector-for-the-next-topping-pattern","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/04\/watch-the-financial-sector-for-the-next-topping-pattern\/","title":{"rendered":"Watch The Financial Sector For The Next Topping Pattern"},"content":{"rendered":"
April 17, 2019<\/div>
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By TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n

A very interesting price pattern is setting up in the financial sector that could lead to a very big move in the US & Global markets.\u00a0 Remember how in 2008-09, the Financial sector and Insurance sector were some of the biggest hit stock sectors to prompt a global market crisis?\u00a0 Well, the next few weeks and months for the financial sector are setting up to be critical for our future expectations of the US stock market and global economy.<\/p>\n

Right now, many of the financial sector stocks are poised near an upper price channel that must be breached\/broken before any further upside price advance can take place.\u00a0 The current trend has been bullish as prices have rallied off the December 2018 lows.\u00a0 Yet, we are acutely aware of the bigger price channels that could become critical to our future decision making.\u00a0 If there is any price weakness near these upper price channel levels and any downside price rotation, the downside potential for the price is massive and could lead to bigger concerns.<\/p>\n

Let\u2019s start off by taking a look at these Monthly charts\u2026<\/p>\n

This first Monthly Bank Of America chart is best at showing the price channel (in YELLOW) as well as a key Fibonacci price level (highlighted by the MAGENTA line).\u00a0 We\u2019ve also highlighted a price zone with a green shaded box that we believe is key support\/resistance for the current price trend.<\/p>\n

As you can see from this chart, since early February 2018, the overall trend has shifted into a sideways bearish trend.\u00a0 The price recovery from December 2018 was impressive, yes, but it is still rotating within this sideways\/bearish price channel.\u00a0 Our belief is that this YELLOW upper price channel level MUST be broken in order for the price to continue higher at this point.\u00a0 Any failure to accomplish this will result in a price reversal that could precipitate a 30% price decline in the value of BAC.\u00a0 In other words, \u201cit is do-or-die time \u2013 again\u201d.<\/p>

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This Monthly JPM chart shows a similar pattern, yet the price channel is a bit more narrow visually.\u00a0 We have almost the same setup in JPM as we do in BAC.\u00a0 The same channels, the same type of Fibonacci price support level, the same type of sideways price support zone (the shaded box) and the same overall setup.\u00a0 As traders, we have to watch for these types of setup and be aware of the risks that could unfold with a collapse of the financial sector over the next few weeks.<\/p>\n

We believe the next few weeks could be critical for the financial sector and for the overall markets.\u00a0 If weakness hits the financial sector as global growth continues to stagnate we could enter a period where the global perception of the future 12~24 months may change.\u00a0 Right now, perception has been relatively optimistic in the global stock markets.\u00a0 Most traders have been optimistic that the markets will recover and a US\/China trade deal will get settled.\u00a0 The biggest concern has been the EU and the growth of the European countries.<\/p>\n

What if that suddenly changed?<\/p>\n

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We are not saying it will or that we know anything special about this setup.\u00a0 We are just suggesting that the Monthly charts, above, are suggesting that price will either break above this upper price channel or fail to break this level and move lower.\u00a0 We are suggesting that, as skilled traders, we need to be acutely aware of the risks within the financial sector right now and prepare for either outcome.<\/p>\n

This last chart, a Weekly FAS chart, shows a more detailed view of this same price rotation and sideways expanding wedge\/channel formation.\u00a0 Pay very close attention to the shaded support channel shown with the GREEN BOX on this chart.\u00a0 Any price rotation within this level should be considered \u201cwithin a support channel\u201d and not a real risk initially.\u00a0 We want to see price break above the upper price channel fairly quickly, within the next 2 to 5+ weeks, and we can to see it establish a new high (above $78 on this chart) to confirm a new bullish price trend.\u00a0 Once this happens, we\u2019ll be watching for further price rotation and setups.\u00a0 If it fails to happen, then the RED DOWN ARROW is the most likely outcome given the current price setup.<\/p>\n

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Any downside price move in the Financial sector would have to be associated with some decreased future expectations by investors.\u00a0 Thus, our bigger concern is that something is lurking just below the surface right now that could pull the floor out from under this sector.\u00a0 Is it a surprise Fed rate increase?\u00a0 Is it some news from the EU?\u00a0 Is it a sudden increase in credit defaults?\u00a0 What is the \u201cother shoe\u201d \u2013 so to say.<\/p>\n

Be prepared.\u00a0 If all goes well, then we\u2019ll know within a few more weeks if the upside price rally will continue or if we need to start digging for clues as to why the support for the financial sector is eroding.\u00a0 This really is a \u201cdo or die\u201d setup in the financial sector and we urge all traders to pay very close attention to this sector going forward.\u00a0 We believe it will be the leading sector for any major price weakness across the global markets.<\/p>\n

Do you want to find a team of dedicated researchers and traders that can help you find and execute better trades in 2019 and beyond?\u00a0 Please visit\u00a0TheTechnicalTraders.com<\/u><\/a><\/strong> to learn how we can help you prepare for the big moves in the global markets and find better opportunities for greater success in the future.\u00a0 Our team of researchers and traders continue to scan the markets for new trades and incredible research for all our members and followers.<\/p>\n

Chris Vermeulen<\/u><\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders.com A very interesting price pattern is setting up in the financial sector that could lead to a very big move in the US & Global markets.\u00a0 Remember how in 2008-09, the Financial sector and Insurance sector were some of the biggest hit stock sectors to prompt a global market crisis?\u00a0 Well, the next […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-145971","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/145971","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=145971"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/145971\/revisions"}],"predecessor-version":[{"id":145972,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/145971\/revisions\/145972"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=145971"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=145971"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=145971"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}