Don't Ignore This Chart!

Industrials Back Test Their Ascending Triangle Breakout

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Over the past week, it's been about an even split among sectors in terms of winners and losers.  Industrials (XLI) is one sector that's been slightly lower over the past week, but technically things still look very bright in this space.  Broken price resistance generally becomes solid price support - that's TA 101.  In the case of the XLI, broken price resistance also was the top of a very bullish ascending triangle pattern as you can see below:

After the XLI rose well above 68, we saw it pull back to test not only price/triangle support, but also its rising 20 day EMA, which is currently at 67.15.  Volume accelerated on the triangle breakout which, in my opinion, helps to confirm the pattern.  Now that the back test is complete, I'd look for absolute and relative strength from industrials.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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