Financial sector now in congestion

Following on from my post on Citigroup I thought it would be interesting to look at the XLF ETF which is the EFT for the Financial Sector, and as we can see how closely this chart mirrors that for Citigroup with the fall in this sector coming to an end ahead of the key 19th December FED meeting which then saw the sector recover which has continued throughout January and February, but the price action is now congesting around the volume point of control which sits in the $26.50 area and denoted by the yellow dashed line.

What is also significant is the volume of the last two days which has risen dramatically and indicates buying support on the narrow spread candles at this level. Immediately ahead on the accumulation and distribution indicator is a very solid region of price resistance at the $26.80 area. This is a region that has already been tested but has held. The key level for the future is now in the $27 region where we have a low volume node and therefore any breakaway from the current congestion should see this pierced with ease provided it is supported with good volume, with $27.50 then on the horizon.

The trend monitor continues to remain firmly blue with only a minor transitional phase in mid-February reflecting the congestion.

By Anna Coulling