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

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Tom Bowley
About the author: co-founded Invested Central in 2004 and served as the site's Chief Market Strategist for more than 10 years. Invested Central provides stock market education and guidance for those interested in making their own financial decisions. During his tenure at Invested Central, Tom co-hosted Market Open LIVE, a national radio broadcast that covered many of the largest markets across the U.S. In addition, he has spoken at various conferences throughout the United States and Canada and has taught thousands of traders across the globe how to trade equities more wisely with an emphasis on managing risk and intermarket relationships. Learn More
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