The iShares U.S. Medical Devices ETF (IHI) is showing strong technical signals for a potential turnaround after a prolonged downtrend since early 2026. Indicators like a double-bottom formation, testing of the 50-day moving average, and a rising RSI, combined with historical support levels in the mid-40s, suggest a more robust rally than previous failed attempts. Furthermore, IHI’s relative weakness against the XLV has pushed its relative strength to historically oversold levels, making its risk/reward profile increasingly attractive.
The iShares U.S. Medical Devices ETF (IHI), a sector often under the microscope, appears to be nearing a pivotal turnaround point, according to compelling technical chart analysis. Despite a challenging period marked by a significant downtrend since early 2026 and notable underperformance against broader market indices, IHI is now exhibiting signs of a potential enduring rebound.
Previous attempts at recovery, evidenced by MACD (moving average convergence/divergence) buy signals in February and April, unfortunately faltered at critical downtrend resistance lines. However, the most recent MACD buy signal in mid-May, initially appearing to follow a similar path, has diverged. A subsequent pullback resulted in a marginal higher low, signaling renewed buyer interest as June commenced. Currently, IHI is striving to capitalize on this latest signal, once again challenging the persistent downtrend line established by its January and early March highs.
This time, the technical landscape looks distinctively more robust. IHI's ongoing bounce has contributed to the formation of a potential double-bottom pattern. Crucially, the ETF is now testing the 51 resistance level, which aligns closely with its 50-day moving average—a level it hasn't touched since the beginning of 2026. Furthermore, the 14-day relative strength index (RSI) has surged above the 50 mark, a feat not achieved since late February, further indicating a shift in momentum.
While investor skepticism might naturally persist given past 'head fake' rallies, the current setup benefits from several compelling short-term technical indicators that were absent in prior attempts. Expanding the view to the monthly log chart reveals that IHI has retreated to a significant support zone in the mid-40s. This specific price area has historically acted as a springboard, leading to substantial bounces in 2022 and 2023, with the latter catalyzing a multi-year advance towards all-time highs. Following a six-month decline from those same highs, the ETF has now returned to this well-established support, suggesting a complete swing from an overbought, resistance-bound state to an oversold, support-laden position. This historical context underscores that buying into weakness within this long-term range has consistently been a profitable strategy.
Moreover, IHI's severe underperformance relative to the State Street Health Care Select Sector SPDR ETF (XLV) cannot be overlooked. After XLV's own period of underperformance in the first half of 2025, it went on to achieve its strongest four-month advance on record. Consequently, the IHI/XLV relative strength line has seen a near-uninterrupted decline. Over recent months, this relative weakness has pushed the 14-month RSI on the ratio to its most oversold reading in history. Coinciding with this, the IHI/XLV relative line has fallen back to its 2016 breakout zone, which also correlates with its peak levels from 2010-2011. This confluence of factors, encompassing short-term and long-term, as well as absolute and relative perspectives, points towards numerous constructive technical developments emerging simultaneously. While an immediate reversal is not guaranteed, these indicators strongly suggest that the risk/reward profile for IHI is becoming significantly more favorable than it has been in a considerable period.
