XLE Energy ETF Daily and Weekly Charts; Positive Divergence Developing; Falling Wedges; Lower Band Violations

Energy has been touted by Wall Street analysts all year long. Energy, oil and gas stocks crash in late January early February but then rally and recover to new highs in late spring and summer. The strategists were busy congratulating each other on how smart they were when energy crashes for the second time this year over the last 8 weeks.

The daily chart shows positive divergence across all indicators as price makes a new low. The falling wedge is bullish. Price has violated the lower band so the middle band at 66.89, at a minimum, is on the table. XLE may form a W bottom which is a very strong bullish pattern especially when it forms below the 50 and 200-day MA's. The daily chart is all systems go for upside.

On the weekly chart, the faling wedge is bullish ditto the oversold stochastics. The indicators are positively diverged except for the MACD line that is weak and bleak. Price begins the week with a bounce but the MACD line will want the XLE to come back down again say, a week or two out, to satisfy the MACD. The bottom will be in on the weekly chart when the MACD line goes possie d which is probably in December.

Thus, the daily chart wants to rock 'n roll higher perhaps with a strong jump due to the W pattern, but in a few days or week or so will likely roll over lower again for a new price low. So if you are a day trader or very short term trader you may want to go for the long side this week but do not stick around. That weekly chart will likely create a little bit more weakness.

Those of you not wanting to trade nimbly, may be best off to wait a couple weeks. Look for that MACD line to go possie d on the weekly, and you can enter a long trade then and stay in XLE for a few weeks ahead. The XLE monthly chart chops sideways not tipping its hand. Generally, energy bulls are going to win big with XLE above 69. Energy bears will cheer if XLE fails below 64. In the near term, stay open to a long trade in XLE. Keystone does not currently have a position in XLE. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.