Energy sector analysis - Squeeze before the next move
As oil price fluctuates between 40$ and 44$, possibly gaining momentum towards major bullish run (see analysis in linked idea), an interesting investment can be in Energy sector.
$XLE had a nice rally following a daily double bottom pattern completion on September. The price rallied strongly into the 70$ zone but was rejected by the daily downtrend line that is holding since September 2014.
Today, despite a red day in the stock markets, Energy is showing strength due to the rise in Oil prices.
The price is in a squeeze mode as it is ranges between the daily Fast and 50 SMA lines.
Two scenarios for the near future:
1, Bearish H&S - Will be triggered if the price will decline below the 50 SMA line and below the structure support zone - 65-66$
2. Potential trend line breakout and a run towards the 61.8 Fib level and the major structure zone near 75$
If $XLE will break out of its trend line, we should consider 75$ as a temporary setup back - potentially leading to a pullback that will allow a better entry for a longer term bullish move in $XLE.
That is still to come.. just put a note in your notebooks for that longer term bullish scenario.
Tomer, The MarketZone
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$XLE had a nice rally following a daily double bottom pattern completion on September. The price rallied strongly into the 70$ zone but was rejected by the daily downtrend line that is holding since September 2014.
Today, despite a red day in the stock markets, Energy is showing strength due to the rise in Oil prices.
The price is in a squeeze mode as it is ranges between the daily Fast and 50 SMA lines.
Two scenarios for the near future:
1, Bearish H&S - Will be triggered if the price will decline below the 50 SMA line and below the structure support zone - 65-66$
2. Potential trend line breakout and a run towards the 61.8 Fib level and the major structure zone near 75$
If $XLE will break out of its trend line, we should consider 75$ as a temporary setup back - potentially leading to a pullback that will allow a better entry for a longer term bullish move in $XLE.
That is still to come.. just put a note in your notebooks for that longer term bullish scenario.
Tomer, The MarketZone
Follow me on TradingView
Subscribe to my newsletters - goo.gl/R3gPVE
Follow my blog - goo.gl/78KZsl
Subscribe to my Youtube channel - goo.gl/q8dbyT
