XLB Continues to Look Bearish

Tuesday the XLB nearly took over its all-important third Bull Fan Line in its daily chart and something that would have put the materials sector in-line with the other S&P sectors and that means a proven reversal of the intermediate-term downtrend born of last August. 

“Nearly” is not the same thing, however, as having made that bullish move and in looking at the intraday charts below, it does not look like a strong possibility for the days ahead.


What appears to be a stronger possibility is the XLB fulfilling that tiny and confirmed Bear Pennant to the right that carries a target of about $37.40 and a level that would take the XLB below that that possible Ascending Trend Channel and something that would support the bigger and confirmed Bear Pennant finding its target of $36.40.

However, if the XLB holds $37.50 or so, there is a chance that its Bear Pennant peaks up a bit higher and right toward $38 before turning down, but the YTD hourly chart suggests that it is more likely that the XLB is going bearish now.


Even more specifically, the chart above suggests that if the XLB does not fall to that tiny Bear P’s target of $37.40 now, it may actually make that breakout above $38 considering there’s not a lot of room in that Rounding Top to accommodate a move to $38 and then back down, but this chart also suggests that this sort of bullishness is unlikely with that unclosed gap at $35.

Put otherwise, the XLB’s YTD hourly chart suggests that the XLB is likely to fall to $37.40, $36.40, $35.00 and then perhaps even to the $33.50 target of that Rounding Top that is showing a nice lower high trend in the current intraday daily form.  However, levels should be respected with the single upside level of $38 offsetting this possible downside succession.