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Short US Home Construction ETF ITB

is a US Home Construction ETF. Like many US equities, it's been struggling since December 2021. On the daily chart shown, price is experiencing a strong downtrend, as seen by the 21 EMA, 34 EMA and 50 EMA all sloping downwards. When the downtrend pauses and price retraces back to these EMAs, it typically falters and reverses.

On the daily chart between January and March of 2022, price rose to either the 21 EMA or the 34 EMA about 4 times. Each time, these daily EMAs held firm as resistance.

Note: All EMAs referenced below use the daily period.
January 13, 2022: price broke slightly above both the 21 and 34 EMAs only to reverse the same day and close below both.
February 9, 2022: after a 3-day rally, price made a feeble attempt to reclaim its 21 EMA. But price could not even touch the 21 EMA though it came very close.
March 2, 2022: price rose and closed above the 21 EMA but could not touch the 34 EMA. The next day price reversed lower and closed well below the 21 EMA.
March 18, 2022: price broke above both the 21 EMA and 34 EMA and closed above them both. This was a bull trap b/c the next day, price once again sliced back below both EMAs, closing below them.
April 20-21, 2022: Price broke above the 21 EMA two days in a row, but each day failed to hold above it.

One might argue that this time will be different. (See the price action within the blue circle.) Price broke above the 21 EMA yesterday and closed above it. But now it's falling below yet again. With trending securities, prices can indeed go lower in a downtrend or higher in an uptrend—prices heading to lower lows tend to go lower, and prices making new highs tend to go higher.

A triangle pattern has also formed, reflecting the recent consolidation and volatility compression in this ETF (and likely in the stocks within it). A cursory Elliott-Wave analysis also suggests that this is an EW triangle pattern that is part of a EW corrective combination pattern going back to April 7, 2022 (blue circle). For most of this year, the price action in between consolidations has been "motive," which is Elliott Wave terminology for moves in the direction of the trend, in a downward direction. The consolidations either upward or sideways have been countertrend, or corrective. So this adds support to my thesis that this current triangle pattern will resolve lower as well.

The first price target is 54.37. The second one is 45.10. I'm using simple long puts expiring 6/17 and 7/15. I'm using longer-dated expirations to prevent theta decay from being too substantial in the next 2-4 weeks.

Note

The triangle pattern mentioned above also works out as part of a larger EW corrective combination. The corrective combination pattern works its way both upwards and sideways within a larger downtrend, strongly suggesting that price will resolve back to the downside in the near term once this correction finishes. The correction should be complete on sub-wave E of the triangle pattern shown below, i.e., the next motive waves down may have already begun on Friday 4/29.

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