The U.S. technology sector (XLK ETF) is displaying a bullish inverse head-and-shoulders pattern that, if confirmed, could target near $216. After a parabolic rally in spring, technology has been consolidating for nearly four months, making the current setup more constructive. XLK, by far the largest sector in the S&P 500, significantly influences the broader index, which is also attempting to complete its own inverse head-and-shoulders pattern and recently hit new all-time highs. However, the Equal-Weight S&P 500 ETF (RSP) has recently declined, forming a potential bearish head-and-shoulders pattern, raising questions about the sustainability of a new technology breakout.
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