Metals and Mining SPDR Battles Breakout


The Metals & Mining SPDR (XME) is battling to hold its resistance breakout. XME broke resistance with a big surge in early September and broken resistance turns into first support in the 43 area. This is a classic tenet of technical analysis: broken resistance turns support. A spinning top formed at the end of September and the ETF consolidated the next seven trading days. Monday's high marks short-term resistance and a close above this level would be bullish. This would reinforce support in the 43 area and increase the chances of a continuation higher.

Click this image for a live chart.

Also note that there is a possible inverse head-and-shoulders pattern extending from June to early September. XME broke neckline resistance and the September decline is a throwback to broken resistance. The breakout is being tested with this throwback and a break below last week's low would be a bearish development. The indicator window shows the price relative trying to form another higher low in early October.  A break below this trendline would signal a return to relative weakness.

Good day and good charting! ~Arthur Hill CMT

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at 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 market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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