Wednesday, February 17, 2016

Energy (XLE): Like alcohol the energy market is the cause of, and solution too, all of life's problems

Energy (XLE) broke through several barriers today, not the least of which was because Saudi Arabia, Iran and Russia all agreed on something (I know, right). XLE is making all the right moves for creating some positive upward momentum in the medium-term (still doubtful if I'm honest) and the EMA's are coming together nicely but XLE came up on a very strong resistance line today. This line was a support line from an intermediate low in late August, late September, December and was also an upward resistance line last month. After today's rise coupled with the rise we've had in the last four sessions I think tomorrow might have a bit of a pullback. I'm not for one second suggesting a huge crash is imminent but the signal line on a couple of indicators have crossed '80' (RSI, stochastics) so it might get a little crowded over the next few days.
Nowhere is this retracement more apparent than on the 30 minute chart where a bearish ascending wedge has been put in. There's a gap that needs to be filled that also happens to be right next to the 38.2% Fibonacci retracement from $55.75 to about $56.75, so maybe it'll head to this area before turning back up again.