Partial Rise Within Channel
The image below shows a parallel channel -- heavy green lines. Four trading days ago it is clear that the last rise reversed before making it to the top of the channel -- heavy red line. When that happens, eventual breakout of the channel is most likely to be down. Note that the resistance of that red line is being respected today, and this increases the risk that if a breakout were to happen soon, it would most likely be down.
XLF has the same trading pattern except that its channel is horizontal, or you could make a slight wedge out of it. Either way, the last rise was partial and its declining red line is also being respected today. If I took any positions yesterday or last Friday, I would have sold them this morning using pivot lines as an early guide of market direction.
The image below shows a parallel channel -- heavy green lines. Four trading days ago it is clear that the last rise reversed before making it to the top of the channel -- heavy red line. When that happens, eventual breakout of the channel is most likely to be down. Note that the resistance of that red line is being respected today, and this increases the risk that if a breakout were to happen soon, it would most likely be down.
XLF has the same trading pattern except that its channel is horizontal, or you could make a slight wedge out of it. Either way, the last rise was partial and its declining red line is also being respected today. If I took any positions yesterday or last Friday, I would have sold them this morning using pivot lines as an early guide of market direction.
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