After a stellar reversal lower from a long trending phase, Real Estate (shown using the popular ETF symbol IYR) faces a key challenge of “make or break” overhead resistance at a key level that provides our current short-term game planning strategies.
Let’s take a look at the chart, the level, a Fibonacci Grid, and note the bull/bear pivot point to watch:
The Daily Chart above shows a pure price perspective of the rising trend that ended with a sharp sell-off swing from $76 to $65 over a few trading sessions.
The confluence downside target held just above $65.00 per share (technically the $65.50 region) which reflects a dual Fibonacci Support Cluster as highlighted.
This is also a ‘polarity’ or prior resistance area, making $65 the easy-to-remember reference level for traders.
Quite simply, a swing down here and breakthrough under $65 suggests that the fund would likely continue a bearish pathway toward $62 per share then the next lower price and Fibonacci Cluster near $59 per share.
Before we add indicators to the chart, we’ll focus on one more price area and it’s the current impulse swing into $70 which is the underside of the 38.2% Fibonacci Retracement as drawn.
The Daily Chart – with indicators – also shows why $70 is the important focal level for the moment:
We see another polarity or prior price resistance cluster into $69 per share and we also note the overlap of the falling 20 day EMA (exponential moving average) into $69.25 along with the falling 50 day EMA just above $70 per share at $70.34.
The main idea is that the current area into $69 and $70 will be critically important for positioning and trading as price either breaks bullishly above $70 to continue the uptrend, or else stalls into the confluence resistance here and trades lower back toward the $65 critical confluence cluster.
A future breakdown under $65 continues opens the fund for a downside price pathway toward $61 again.
For now, we’ll note $69 to $70 as the “neutral” zone; a break above $70 as a “bullish breakout” development (note the green highlight); and finally a stall or movement lower from $69 as the “bearish pathway” for price.
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Corey Rosenbloom, CMT
Afraid to Trade.com
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