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XEL daily and weekly 21/09/13

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Finally some price action to take note of in XEL after a lengthy period of sideways movement.

Thursday saw the first close above the final downtrend resistance (there were others from higher price points which have been seen off with little impact). What makes this one appear different was Friday's price action.

After a gap up on open, the price dropped back to test the downtrend and was bought back up to near the open forming a hammer and a successful backtest which should be seen as a sign of strength by the market.

The only downside to this is that the RSI closed right on its own downtrend resistance, but this trendline comes from the all time high at 425p, not the high which formed the price trendline, so if this can be taken out we are likely to be in a new trend. The weekly chart shows that this is likely occur if RSI is anything to go by:
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Here we can see the whole move since the peak at 425 (some charts have this at 434 I think). I've shown the whole move so we can see where the RSI resistance came from and its importance.

The interesting thing here is that there has been a breakout on this timeframe which suggests that it is likely to follow on the daily too. In fact, it quite often happens that the weekly is the first timeframe to show an RSI breakout so it's always worth checking that timeframe if you're looking for a trend change.

Friday's bullish close suggests further gains to come next week, though the bearish nature of the US markets on Friday evening may give pause to this unless FTSE futures regain their losses in overnight trading on Sunday.
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