Possible Gartley Butterfly XLF Financials ETF

The XLF Financials ETF is currently showing a possible gartley butterfly sell pattern.  If the pattern is valid then we should begin to see very soon a sell off in the XLF Financials ETF.  The pattern and its bearish implications will not work if we start to see the XLF trade higher than 14.74.  As of February 7, 2012 the XLF closed at 14.66 and traded as high as 14.71.

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Note the declining volume trend that coincides with the right portion of the pattern.  This supports the case of the pattern being valid.

Currently the other market indices are trading higher with dramatic low volatility momentum and moving into extreme overbought territory.  Sometimes the selling out of gartley bearish butterfly patterns can be very dramatic and very fast.  Ideally heavy selling would begin to occur at the latest by the end of this week, otherwise we might have to conclude that the above gartley sell pattern is not going to be valid at this time.

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