The Cybersecurity ETF (CIBR) was hit with the rest of the tech sector over the last few weeks, but it held the March lows and is on my radar as a possible triangle forms over the last few months. In particular, I am watching the downswing within this triangle for early clues on a bullish reversal. First, note that the long-term trend is up because CIBR is above its rising 200-day SMA. Otherwise, I would not even consider a bullish setup.
The chart shows CIBR hitting new highs in February and then correcting with a trading range the last three months. With a lower high and possible higher low, a triangle could be taking shape. Note that a triangle within an uptrend represents a consolidation or bullish continuation pattern. CIBR was quite overbought after the prior 42% advance and this triangle worked off these overbought conditions. A break above the upper line would end the consolidation and signal a continuation of the bigger uptrend.
I do not want to wait for a triangle breakout so I am watching the swings within the triangle for a quicker jump. CIBR fell from late April to early May and the current swing is down. A harami formed on Tuesday-Wednesday with the long white candlestick and inside candle. After a few weeks of selling pressure, harami signal sudden indecision that can sometimes foreshadow a reversal. There was another inside candle on Thursday and a nice bounce on Friday. A break above 43.5 would fully reverse the downswing within the triangle and provide the first sign that a bigger breakout is in the making.
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Arthur Hill, CMT
Chief Technical Strategist, TrendInvestorPro.com
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