Financials

I had an email asking what Financials looked like, it' easier to show you than explain.

 Financials put in one of those bearish ascending wedges that we've seen get manipulated so many times. According to Technical Traders, when price reaches the apex, price should break to the downside and retrace the base around $11.50, instead they run a head fake move to the upside, this is important because not only do they knock out the shorts, Technical Analysis teaches when you have a price pattern like this fail, change your position and go the other way, LONG! As you can see, the longs who chased the breakout would be stopped out too and XLF goes on to build a larger top, with bullish descending wedges, we see the exact opposite and they go on to build a base. Eventually the patterns seem to make good, so XLF should at least retrace down to the base at $11.50, but it doesn't have to stop there. The yellow are a confirmed head fake or false breakout and the one now is very likely to be the exact same thing.

 The important support/resistance trend  line from the daily chart above is drawn in here, remember the point of a false breakout or head fake move is to get bulls to buy on a strong price move and then to trap bulls. Look at the 1 min trend as price moves above the breakout level, this is exactly how we confirm head fake/false breakouts. What is very interesting is how the floor just fell out at the close today. I've mentioned several times today how steep and extreme many of the divergences have been today, something not seen often and maybe not ever like on a scale as was present today.

 Here's a closer look at what happened at about 1:30. The idea is to sell/short in to price strength with smart money if the signal is there, but usually it is more of a process, this looks like an event or a last ditch move.

 The 2 min chart shows nearly the exact same thing as the 1 min trend, the leading negative divergence gets much more extreme as price passes the resistance level. If this were a healthy trend, it would look like the FB charts posted and 3C would make higher highs with price.

 The 3 min chart shows the same concept, note Aug 2nd accumulation seen market wide, THIS WAS NOT COINCIDENCE. The breakout occurs just after that accumulation and almost immediately there looks to be selling in to higher prices as the 3C trend gets worse as price moves higher.

 The 5 min chart with several neg./pos. divergences, note Aug 2nd again, then a leading negative divergence on the breakout.

 The longer charts will show less detail, but a cleaner trend, the 15 min shows Aug. 2nd accumulation at price lows, they buy at lows the same way they sell/short at highs, the trend in 3C is pretty clear and worsening. Now that multiple timeframes are aligning and we have the head fake move, the break could be any minute.

 The 30 min trend from confirmation of the move in green to a negative relative divergence to a leading negative divergence.

This 4 hour chart is the cleanest, the green arrows are just 3C/price confirmation of the trend at the time, note the negative divergence in March, the positive at June 4th and before as we saw the bearish triangle set up and break lower in to accumulation, and the size and depth of the leading negative divergence now and especially at the break above resistance.

This appears to be a very clean head fake move/breakout confirmed on multiple timeframes and in multiple markets. These head fake moves are almost always the last thing to happen before a reversal. The bulls getting caught as price moves lower provides stop selling which adds more supply and pushes price down faster, hitting more stops, shorts step in. The head fake move creates the snow ball concept, "From failed moves come fast moves in the opposite direction".