If this market rally is going to continue, it sure would be nice to see more rotation and strength in $IBB. No one day does not make a trend, but something that is going to be strong should not Engulf like it did today.
Let’s look at some things worth watching for.
On the daily timeframe, many are thinking this is a double bottom type formation. Some things that are constructive to that thesis are the RSI momentum divergence seen below. That certainly is an indication that the downside momentum has dried up and there is a potential for the very least a rally.
Under the surface, looking at the hourly, it appears to me this thing at very critical support and a close below 250 would not be good.
What we see here is VWAP from the highs on 3/7 and VWAP from the lows on 3/7 along with the Fib retraces from the recent swing move.
We see we closed right between the two VWAPS and just above the 50% retrace.
If buyers are going to step in here, you would think these are the levels. Further follow through however and a close below 250, I believe sends this far lower and like to the 161.8 retrace at 227.75.
Know your levels and trade accordingly, don’t marry positions.
Looking at the XBI we are certainly is some kind of choppy range. Which way do we go?
Well we have failed the inverse H&S (blue) And have now formed a H&S (yellow) See if XBI can retest 47 and move lower below 44, or can it get back above 55 to go higher. This thing has no idea where it want’s to go right now. There are easier trades out there IMO.