Daily Market Report

Utilities Select Sector SPDR Fund forms bearish "Diamond Top" chart pattern
Sep 09, 2011

Recognia has detected a "Diamond Top" chart pattern formed on Utilities Select Sector SPDR Fund (XLU:NYSE). This bearish signal indicates that the stock price may fall from the close of $32.80 to the range of $27.70 - $28.60. The pattern formed over 73 days which is roughly the period of time in which the target price range may be achieved, according to standard principles of technical analysis.

Tells Me: The price seems to have reached a top, showing signs of reversal as it has broken downward after a period of uncertainty or consolidation. The Diamond Top pattern begins during an uptrend as prices create higher highs and lower lows in a broadening pattern. Then the trading range gradually narrows after the highs peak and the lows start trending upward. When the price breaks downward out of the diamonds boundary lines, it marks a significant reversal to a new downtrend.

This bearish pattern can be seen on the following chart and was detected by Trading Central proprietary pattern recognition technology.

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