Good News, If You’re Short
Yesterday, biotech (XBI) had the chance to reverse off Wednesday’s lows, continue higher into an upside move, a Wyckoff spring.
It didn’t happen.
The move failed spectacularly.
The ‘Street’ pays attention to such failed moves. Thus far, unless there’s some kind of massive demand, biotech XBI, has penetrated and tested support, now resistance, and is moving lower.
Strategy First
Recall, the work was done (three weeks ago) indicating high probability of a long-term reversal in this sector.
Adding some entertainment with the Fed is, or the Fed isn’t (going to cut rates). How about the Fed never was. 🙂
Until proven otherwise, we’re in a high, and higher, interest rate environment.
Biotech XBI, 4-Hour
Moving closer-in on the chart, the 4-Hour.
As we can see, on March 21st, XBI had a change of character.
Price action was relatively ordered and well behaved but then became more volatile on the 21st; it all fell apart, declining sharply on April 2nd.
At the point where the ‘change’ is noted, it also looks like XBI, began to form its (current) trading channel.
P&F Projection
If XBI, continues its decline, where’s it going?
What’s a likely target?
There are several methods that can be used; Fibonacci projection, measured move, and P&F to name a few.
A basic P&F projection is shown below:
What’s shown is the maximum projection range (not advice, not a recommendation).
As this post is being created (11:52 a.m., EST), XBI continues to grind its way higher in what’s likely a move to test resistance in the 90.50 – 90.60, area.
For the breakdown to be negated, we would need to see a decisive upside penetration of the right-side channel line.
It’s close but so far, price action is within ‘normal’ correction boundaries.
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
Pingback: Biotech … Beat Up & Down « The Danger Point®