More pain ahead in this sector.....

I borrowed the chart for today's blog.

XLF, the ETF for the financial sector, is presenting a classic textbook bearish head and shoulders pattern that completed last week 

on April 26. This pattern often leads the stock down towards its next major support. At the moment, the obvious support is around $31ish as shown in the red line, which

 is an important level for XLF. It represents a major top from which prices broke down in February 2020. 

Markets have long memories. It's common for them to re-test past important levels like this one. So, I wouldn't be surprised if we test this level over the next week or two. 

However, it is very important: it doesn't mean the decline must go down immediately as a straight line. Actually I think there is a good chance XLF will go up first to kiss its neckline as the resistance. If so, likely it will fail to break out and then head back down to test its support.