Don't Ignore This Chart

United Technologies Forms Classic Continuation Pattern

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United Technologies (UTX) looks ripe for a breakout to new highs as a bullish cup-with-handle pattern takes shape. Note that UTX is in the industrials sector and the defense-aerospace industry group. The Industrials SPDR (XLI) and the iShares Aerospace & Defense ETF (ITA) both hit new highs on December 1st. The chart shows UTX in a long-term uptrend because it hit a new high in July and the 50-day EMA is above the 200-day EMA. It looked like the stock was breaking down with the gap-plunge in early September, but this turned into a high-volume selling climax. The September low marks the bottom of the cup, the November low marks the handle low and the pattern highs mark resistance. A break above this resistance zone would signal a continuation higher. Signs of increased buying pressure emerged last week as the stock surged towards rim resistance on above average volume.  

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--Arthur Hill CMT

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Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. He has written articles for numerous financial publications including Barrons and Stocks & Commodities magazine. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed technician. In addition to his CMT designation, Arthur holds an MBA from the Cass Business School at City University in London. Learn More
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