After an incredible rallying phase that began just a day before the US elections in November 2020, we have seen massive rallying in some areas. Are the markets beginning to warn us that this rally phase may be stalling? We have seen long ago that some of the strongest areas are showing slight weakness on the first day of trading this week. Is it due for triple-witching this week (Friday, March 19, 2021)? Or is it because Treasury yields continue to move slowly upwards? What exactly is happening right now and should traders/investors be cautious?
The following XLF weekly chart shows how the financial sector climbed above the upper yellow price channel, which was set from the 2018 and pre-COVID-19 2020 highs. Overall the start of 2021 was great for the financial sector, we saw a 40%+ rally in it in just 6 months, on hopes that the US economy will turn into a growth phase as new COVID vaccines are introduced.
We are also concerned about an early TWEZERS TOP pattern that has been established earlier this week. If we move further through the futures contract expiration week, FOMC, and other data this week, we could see some strong resistance forming near $35.25. Have the markets overtaken themselves recently? Could we be ready for a marginally deeper price cut soon? ….read more here.
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