Materials Sector (XMJ) Weekly Chart Outlook 04/02/2017.

Completion of an INVERSE HEAD & SHOULDERS ACCUMULATION PATTERN at the break of the neckline was on hand. This was the defining moment for this sector which turned it’s MAJOR TREND UP.

I am employing standard Bollinger Bands, which I see as an adaptive trend channel with a mean. Mean being the 14 period weekly SMA in Red. Reason being, I am trying to forecast where I should expect support during any corrective period. Have a look at the mean of the bands, what do you see ? Almost every time price action tested it, it had bounced off it. The cluster of the mean and prior price support has a greater importance in terms of that level acting as support.

A price resistance from earlier on, going back few years, coupled to an overbought conditions and we have a HOOK REVERSAL on hand now. This may lead to a potential BEARISH PIVOT POINT during the course of the next few trading weeks, until the current overbought conditions are resolved.

At this stage we  deal with the short term HOOK REVERSAL on hand and wait for the potential corrective period to end at or around the mean of the bands. Analysis continues…

Weekly XMJ chart below.

xmj04022017

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