{"id":21765,"date":"2024-05-03T07:30:27","date_gmt":"2024-05-03T11:30:27","guid":{"rendered":""},"modified":"2024-05-03T07:30:27","modified_gmt":"2024-05-03T11:30:27","slug":"heres-what-we-need-to-see-for-this-energy-trade","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/heres-what-we-need-to-see-for-this-energy-trade\/","title":{"rendered":"Here\u2019s What We Need to See for This Energy Trade"},"content":{"rendered":"

Stocks are hurting. No doubt about it.<\/p>\n

Of the last five weeks of trading, the S&P 500 has closed down for all but one of them.<\/p>\n

But there are some bright spots in this current market environment.<\/p>\n

For instance, the energy sector could be developing into a great opportunity…<\/p>\n

Now it’s true that energy’s also taken a bit of a beating. The energy select sector ETF (XLE) has pulled back over 7.5% since putting in a top on April 12.<\/p>\n

But XLE is currently trading into some technical support. It’s time to see the ETF start staging a comeback.<\/p>\n

XLE has now hit its 50-day moving average. And coincidentally, this also lines up with the October 18 closing price of $91.96.<\/p>\n

And at the same time, XLE is also tracing out a bullish flag pattern.<\/p>\n

Let’s take a look at a chart of XLE below. I’ll explain why this combination of technical elements could be bullish for the ETF.<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

The reason this $91.96 price level is significant is because it marks a major previous top in XLE.<\/p>\n

Since putting in that top on October 18, XLE dropped over 14%, eventually finding a bottom on January 18. And then on March 18, XLE finally broke above that $91.96 level.<\/p>\n

Markets have memories. And when an important price level gets broken as resistance on the way up, it often flips into a support level when the market starts pulling back.<\/p>\n

The only issue with this technical setup is that XLE hasn’t yet reached oversold levels on some key momentum indicators like the Relative Strength Index (RSI).<\/p>\n

<\/p>\n

\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n

<\/p>\n

To reach oversold conditions, we need a reading as low as at least 30. XLE has registered a reading of 38 so far.<\/p>\n

That means it’s possible XLE needs to trade a bit lower still before selling pressure is exhausted.<\/p>\n

This is why we need a piece of clearly bullish price action before getting into the trade.<\/p>\n

That’s where the bull flag (orange lines) come in.<\/p>\n

If prices can break through the upper trendline of the pattern, that would be a clear sign of bullish intent.<\/p>\n

It’s important not to enter the trade before this event takes place. If there’s no breakout, then the market will continue to trade lower.<\/p>\n

If XLE trades lower, it will eventually reach those oversold conditions. And that means a new potential setup will take shape.<\/p>\n

Happy trading,<\/p>\n

\"Signature\"<\/p>\n

Imre Gams
Analyst, Market Minute <\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Stocks are hurting. No doubt about it. <\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[76],"newsletter-type":[],"ticker":[],"class_list":["post-21765","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-imre-gams"],"acf":[],"ai_tts_audio_outdated":false,"ai_tts_legacy_post":false,"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21765","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=21765"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21765\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=21765"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=21765"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=21765"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=21765"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=21765"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=21765"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=21765"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}