themarketzone

Energy sector analysis - Squeeze before the next move

AMEX:XLE   ENERGY SELECT SECTOR SPDR FUND
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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Tomer J,
The Market Zone - You trading Edge
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