Potential Trade Setup in the Tech Sector

I am watching the XLKs for a potential trade setup. There is clearly defined resistance around the $48 level and support around the $46 level.  They are trending lower now and approaching the $46 level again. 

If they bounce off of support and break the downtrend line I would go long with my stop-out at $46 and price target at $48.  The important thing is to wait until the downtrend line is broken and to buy it while it is on the way up.  Don't try to catch the bottom!  Waiting until the downtrend line is broken, which simply means that they have stopped going lower because the forces of supply are no longer overpowering the forces of demand, is a much better risk/reward strategy then trying to catch the proverbial 'falling knife'. 

Conversely, if the $46 level is broken to the downside, I would consider a short position with a stop-out at $46 and a target of $44.50.  This level was clearly defined resistance from October of 2015 through this past July so there will probably be support there.

Here is the view since June and below is a longer-term picture since September of 2015.