SPDR S&P Homebuilders ETF (XHB) has been forming a Bullish Symmetrical Triangle pattern over the past six months and may be ready to move out of it. Since the trend prior was bullish, the breakout is likely to be to the upside. However, a breakout of the triangle is needed to confirm direction.
XHB ETF Bullish Symmetrical Triangle
A failure is indicated by a move through the bottom trend line with a bearish decline likely to follow. At that point other horizontal support levels should also be considered.
XHB recently found strong support at the bottom of the triangle was found by the confluence of the 38.2% Fibonacci retracement level of the larger uptrend and 200 period exponential moving average (EMA). From there XHB rallied and found resistance at the top trend line confirming the significance of that line as it was a third touch of the line.
XHB ETF Bullish Symmetrical Triangle
A breakout is indicated once price moves through resistance of $16.63, confirming the likely continuation of the previous bullish trend.
Watch the next nearby resistance level at $16.75 closely as it’s also the area of the 50% Fibonacci retracement level of the larger trend and a move through there greatly increases the chances of XHB reaching its target based on the measuring objective of the Symmetrical Triangle.
The minimum target based on the Symmetrical Triangle is $19.47.
[Measuring objective of Symmetrical Triangle: top of triangle = 16.63, less 13.50 (bottom line) = 3.13 difference. Breakout at 16.36 resistance + 3.13 = 19.97 target]
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