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Patrick Dunuwila

Chart of the Day - Friday, August 29, 2025

August 29, 2025

 

🏆 Today's Chart of the Day was shared by Michael Kahn (@mnkahn).
 

  • Despite all the hype around $NVDA earnings, the Technology Sector ($XLK) finished the week unchanged. It closed slightly lower for the month by just -0.11%, ending a four-month winning streak.
     
  • As we enter the worst month of the year, Michael notes that $XLK has formed a potential Head & Shoulders Top over the past month. Breaking below the neckline, around $255, would confirm this bearish pattern.
     
  • Momentum has faded, with RSI diverging and failing to produce a single overbought reading in August. Chart patterns often fail when everyone sees the same thing, and it's often bullish when bearish patterns fail. However, the major indices will struggle if their largest sector completes this top.
     
The Takeaway: The Technology sector ($XLK) has formed a potential Head & Shoulders Top as we enter a notoriously bearish month. If this top completes, the major indices will feel the pressure. However, if it fails, it will be a tailwind into year-end.
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