{"id":146509,"date":"2019-04-26T09:00:55","date_gmt":"2019-04-26T13:00:55","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=146509"},"modified":"2019-04-26T06:47:19","modified_gmt":"2019-04-26T10:47:19","slug":"financials-setting-up-an-island-top-formation","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/04\/financials-setting-up-an-island-top-formation\/","title":{"rendered":"Financials Setting Up An Island Top Formation"},"content":{"rendered":"
April 26, 2019<\/div>
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By TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n

As we continue to scan the charts for setups and trigger to alert our followers, we\u2019ve come across a setup that may be more ominous than what it appears.\u00a0 Recently we\u2019ve posted articles about how the SPY and the NQ have pushed into new all-time high price territory and how Gold is setting up for a momentum base that should launch precious metals to near highs.\u00a0 We\u2019ve also discussed how we believe the current upside price bias in the US stock markets should last another 10~35+ days before new price weakness sets up \u2013 possibly pushing prices lower in late May or early June 2019.<\/p>\n

Our research team has been scanning the charts looking for anything that could give us an edge to the potential setup for this price weakness in the future.\u00a0 We believe the Transportation Index and the Financials could be keys to understanding how far the upside rally can continue and when a price peak may begin to warn of a potential price top or rollover.<\/p>\n

An Island Top is a pattern that sets up with an upside price gap followed by sideways price action above that gap.\u00a0 In theory, this type of setup should promote the gap to be filled with downside price action before any further upside price move can continue.\u00a0 Although, gaps to the upside are fairly common in strong uptrends.\u00a0 Given the strength of the earnings data released early this week and the expectations that we have for some continued upside price bias over the next 10~35+ days, we are watching these Island Top formation in the Financials for any signs of weakness to alert our followers.<\/p>\n

This Daily FAS chart highlights the GAP as well as the Resistance levels that are currently acting as a ceiling.\u00a0 A breakout above the resistance level would indicate that we have more room to run higher.\u00a0 Any failed breakout to the upside, where price briefly rallies above the resistance level, then falls back below it, would be a pretty strong indication of a rotational peak.\u00a0 The Financials could fall 10% from current levels and still be within the range of the March\/April lows.\u00a0 It would take a much bigger move to qualify as a breakdown bearish trend.<\/p>\n

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This Daily XLF chart highlights a similar pattern to the FAS chart.\u00a0 The key element of the XLF chart is that the Resistance level provides more key fundamental price peaks than the FAS chart.\u00a0 On this XLF chart, we can see that the current Resistance level aligns perfectly with the Nov\/Dec 2018 highs.\u00a0 We can also see a short GREEN Fibonacci trigger level line in early March 2019 above the Resistance level.\u00a0 That Fibonacci trigger level is still valid and any move above that level would constitute a new bullish price trend trigger.<\/p>

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Any failure to break the Resistance level would qualify as a price rotation to fill the GAP and potentially set up a move back to near $25 looking to find new support.\u00a0 Overall, the Financials are poised for a move \u2013 up or down.\u00a0 Our research suggests the US stock market is not done rising, thus we are concerned that certain sectors may begin to show signs of weakness as the broader market continues to rise.<\/p>\n

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Our research team believes a critical peak formation is likely near the end of May or in early June 2019.\u00a0 It is because of this belief that we are warning traders to play the next 15~25+ days very cautiously.\u00a0 Watch the Financials, the Transportation Index, the US Dollar, and Precious Metals.\u00a0 We believe any early signs of weakness will be found within these symbols.<\/p>\n

With a total of 55\u00a0years of technical analysis and trading between Brad Matheny, and myself Chris Vermeulen, our research and trading signals makes\u00a0analyzing the complex and ever-changing financial markets a natural process. We have a simple and highly effective way to provide our customers with the most convenient,\u00a0accurate, and\u00a0timely market forecasts available today.\u00a0Our\u00a0stock and ETF trading alerts\u00a0are readily\u00a0available through our exclusive membership service via email and SMS text. Our newsletter,\u00a0Technical Trading Mastery book, and\u00a0Trading Courses\u00a0<\/span>are designed for both traders and investors. Also, some of our strategies have been fully automated for the ultimate trading experience.<\/p>\n

Chris Vermeulen –\u00a0TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders.com As we continue to scan the charts for setups and trigger to alert our followers, we\u2019ve come across a setup that may be more ominous than what it appears.\u00a0 Recently we\u2019ve posted articles about how the SPY and the NQ have pushed into new all-time high price territory and how Gold is setting […]<\/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-146509","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/146509","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=146509"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/146509\/revisions"}],"predecessor-version":[{"id":146510,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/146509\/revisions\/146510"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=146509"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=146509"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=146509"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}