Ascending Triangle in the XLE
The Macro trends of 2022 are no secret to any of us. Sky rocketing inflation and the war in Ukraine have lead to soaring energy costs around the world. As a result, Oil has seen a period of extreme volatility, reaching a high of closing high price of 129.44 on March 8th. As a result, the XLE has followed suit and is up about +30% year to date. Exxon, the largest holding in the XLE, reports earnings on April 29th and has expressed that the anticipate setting record profits. Buy the rumor?
The XLE appears to be forming a nice Ascending Triangle, which could be suggesting a bullish continuation. The Ascending Triangle isn't a particularly strong pattern from a statistical perspective with only about a 60% chance of realizing the bullish continuation. Take it with a big grain of salt, but there is also a very slight Hidden Bullish Divergence on the MACD. Nevertheless, it warrants paying attention to as a potential swing trade.
A lot will depend on what Oil does, and the fact that XOM and CVX are reporting earnings on the 29th muddies the waters a bit. However, it could offer a nice opportunity for a shot in the dark trade to the upside looking for a pop the upside in advance of the earnings. Maybe something like an OTM Call spread around the .30 delta in XLE 30 days out or so...
The XLE appears to be forming a nice Ascending Triangle, which could be suggesting a bullish continuation. The Ascending Triangle isn't a particularly strong pattern from a statistical perspective with only about a 60% chance of realizing the bullish continuation. Take it with a big grain of salt, but there is also a very slight Hidden Bullish Divergence on the MACD. Nevertheless, it warrants paying attention to as a potential swing trade.
A lot will depend on what Oil does, and the fact that XOM and CVX are reporting earnings on the 29th muddies the waters a bit. However, it could offer a nice opportunity for a shot in the dark trade to the upside looking for a pop the upside in advance of the earnings. Maybe something like an OTM Call spread around the .30 delta in XLE 30 days out or so...