Turning Up The Heat

It’s all quiet on the biotech front but for those paying attention, the temperature’s rising.

XBI (sector ETF), penetrated support and is now testing that breakdown.

At this juncture, anything can happen. A new lease on life, and we get a reversal higher.

However, probabilities argue against that scenario; multiple posts, here, here, here and here, present the case for significant downside (not advice, not a recommendation).

Going to the price action, we’ll use a 3-Day chart.

Biotech XBI, 3-Day

You might ask, ‘Who uses a 3-Day chart?’, ‘I don’t know anyone that does.’

Well, this may be the only place and that’s the point. 🙂

The 3-Day, for this market, at this juncture, shows support/resistance areas more clearly.

Notice on the current bar how the close (as of 3:15 p.m., EST) is below resistance, the blue line.

Then, look how the prior bar closed above the resistance area. The attempt to test this area (resistance breakout) and make it support has failed (thus far).

As a reminder, it’s the failed moves that get the attention of The Street.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279