The S&P Financial SPDR ETF ($XLF) has traded within a well-defined range the last three months and has now reached a decision point in the chart – up or down? Let’s take a look at the levels I’ll be watching for significant price action.
Critical Support
The $XLF is sitting right on key support at $13.30, which has held since 2009. The last time this level was tested, a swift rally sent price back to $15. After dropping from resistance at $15, price is again testing this support level in anticipation of a break or bounce.
Since price has been sitting on this level for six straight sessions, clear upper and lower boundaries have been created – $13.75 up, and $13.30 down. A close beyond either of these levels will likely signal the next medium term move in this ETF.
Since price has traded away from the multiple pivot-based moving averages lately, we could see a reversion to the mean. That is, price could bounce off support and rally back toward the moving averages for a test in the $14-14.25 zone, and potentially back to resistance.
Otherwise, a violation through support could spark the next nosedive in price. I’m not exactly sure the market wants this, however, as $13.30 has held for 15 months and the next area of support is $11.
There is clearly a battle at $13.30, but we now have clear levels to watch for potential movement. Keep an eye on $13.75 and $13.30.
Let’s see what happens!
Cheers!
Frank Ochoa
PivotBoss.com
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