(Click on image to enlarge)
The chart above looks at the Bank Index over the past 13-years. In 2007 at (1), the index created a topping pattern, prior to the financial crisis and its 80% decline over the next couple of years.
The rally in banks over the past 7-years inside of rising channel (2) has it back at the height of the right shoulder of the topping pattern at (1) as well as at the top of the rising channel at (3). As it was hitting both price points at (3) a couple of weeks ago, a reversal pattern took place.
Currently, the decline in banks has it testing rising support at (4), with momentum (not shown) at very lofty levels. Bank bulls or owners of XLF, BAC, C, JPM, WFC, GS and bulls in the broad market do not want banks to peak here nor break rising support at (4).
The Power of the Pattern is of the opinion we are at a very important price point in many markets.
