In last week’s commentary we provided a chart of the SPDR KBW Regional Banking ETF ($KRE), which was in pullback mode after breaking out to new 52-week highs in mid-September. Although the price action has retreated back to the rising 20-day EMA, the action as it touched the moving average (on 9/25) was ugly, as it basically closed at the lows of the day on a wide ranged bar. We continue to wait for a bullish reversal candle to signal a low-risk buy entry, but a move above the two day high is a potential entry point to begin building a position. One could wait for the price action to push higher and form a higher low (HL) at or around the 20-day EMA (within the next two weeks) before adding to the position on a potential second move out. The chart below details the ideal price action to establish a higher low.

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