Premium Preview: Predator Lurking In $IYR Attic

IYR, the ETF for US Real Estate, has been moving upward nicely but now a bearish predator is lurking.  This means a harmonic pattern called Bearish Shark has completed at the PRZ  (Potential Reversal Zone).  Where price can break and hold beyond this PRZ, as shown in red, is key for initial directional bias.

This Day chart Shows price is certainly inside the PRZ accompanied with expansion and negative divergence, so this implies either a stall in the PRZ or attempt to pull back into support.  That's the probability but certainly not the guaranteed scenario.

IYR Day Chart

The ideal scenario in the world of valid harmonic patterns is a Retrace Mode, this is when price can hold below the PRZ if it's bearish.  Note the ideal minimum retrace target is 77.86 and ideal targets are either 75.58 or 65.88 and scaling points at the gray colored levels.  There's some barriers that will need to defend the bullish bias ahead of the retrace targets, currently those pull back targets are 82.40 and 80.68 but are subject to shift.

The other side of the coin in this PRZ situation is a hold above the PRZ.  See, the PRZ is a decisive region and until there's conviction to break out one side or the other, the probability may be to break down the PRZ, but if the bulls defend the current upside bias, and a hold above 85.52 occurs, it lessens the probability of Retrace Mode and increases the probability of heading for extension targets 90.54 or 97.25.

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