After making a new intraday high on 1/27/15, the Utilities (XLU) peaked and started a sharp decline which finally bottomed after losing roughly 10% and targeting a key support region which coincides with other previous support/resistance levels and main moving averages.
If we look at the 60 minute chart we see that as price moved into this support region, it started to build strong positive divergence on the intraday chart which can be a tell that support will hold — at least initially.
While the XLU has moved off the lows, we do not think it is out of the woods. Particularly the MACD on the Daily looks like there is a lot of work still needed with either sideways action or lower before this move is over.
If we are looking at the name from the long side then we want to see a push toward the $47 region which is accompanied by a high consolidation and then a strong breakout. That breakout could then look to target the recent highs near $49-50. This scenario is displayed on the 60 minute chart. Until then, we see a strong risk that the 2/17 lows will be lost or at minimum revisited.