The financial exchange-traded fund (XLF) is showing the right technical stuff in recent weeks. Let's explore the charts and indicators.
In this daily bar chart of the XLF, below, I can see that earlier in the past 12 months the XLF found buying interest (support) in the $31-$30 area but in May the XLF found buying interest above $31 suggesting to me that buyers were being more aggressive. The trading volume has been more active in the past three months. The On-Balance-Volume (OBV) line has been weak the past year and is not in sync with how I view the price action. The Moving Average Convergence Divergence (MACD) oscillator is slightly below the zero line. Prices are below the 200-day line but above the 50-day.
In this weekly Japanese candlestick chart of the XLF, below, I can see a number of lower shadows on the recent candle patterns. Traders are rejecting the lows. The weekly OBV line looks stable. The MACD oscillator is below the zero line but has narrowed significantly and could soon cross to the upside for a cover shorts buy signal.
In this daily Point and Figure chart of the XLF, below, I can see an upside price target in the $48 area.
In this weekly Point and Figure chart of the XLF, below, I can see a $48 price target being projected.
Bottom line strategy: Despite the negative news about the banking industry and worries about the direction of interest rates the charts and indicators now pointing toward higher prices in my opinion.
