XLE Energy ETF Monthly Chart; Sideways Symmetrical Triangles

XLE, the energy sector, has been a sick pup ever since the 2014 top five years ago. Obviously, oil prices greatly impact the sector but for a global economy that is supposed to be in great shape, XLE would be expected to be far higher. This month's candlestick taps on the 50-month MA resistance at 62.43. The December high thus far, with two days remaining, is 62.44 kissing the key resistance level and then receiving a spankdown.

The 50-month MA is moving dead flat sideways and other moving averages are lining out sideways as well. The theme of the chart is sideways. The 62.43 level tells the story; energy, and stock market bulls, will throw confetti if XLE pops above 62.43 while bears are happy with XLE below 62.43 and falling.

If price takes out the 62.43 to the upside, and you can see momo in the RSI and ROC over the last couple months opening the door to this scenario, watch the 20-month MA resistance at 63.48. Above here, and the bulls will be celebrating.

The moving averages stagger sideways like a drunk in Times Square on Saturday night, ditto the chart indicators, ditto price itself. A major decision is on tap for the energy sector, which would likely move in concert with the oil market, in 2020. The blue sideways triangle could stretch on to 2021 maintaining the flat price action for another couple years but energy will likely make its directional decision in 2020. The outside blue vertical line is about 38 handles tall and the inside vertical line is about 30 points the same as the thick purple line.

If price falls below the blue trend line at 56, that will target 26. This would be the doom and gloom Armageddon story for the US and global markets. Faith and confidence would likely be lost in the Fed and other global central bankers and the whole mess collapses. If price breaks up through the upper blue trend line at 68, that will target 98 and more record highs in the stock market will continue.

Looking at the purple triangle, it has a tighter apex that says the big up or down decision for the energy sector will occur, say, by summertime. If price loses the 58 level, that opens the door to 28. In this doom and gloom scenario, watch the lower blue line at 56-ish and support at the 200-month MA at 53-ish. If these fail, it would be over for markets. Recession would be in play and job losses would be accelerating. You will realize that when the boss told you the company could not survive without you he was lying.

If price takes out the 50-month to the upside, and it has the short-term momo as mentioned above, and then breaks above the 20-month and upper purple trend line both at 63-ish, that will target 93. If the upside breakout occurs watch the upper blue trend line since that will signal the all-clear for non-stop bullish joy in 2020 above 68-ish.

This sideways action does not offer an attractive trade long or short. Using the above guidelines, however, a short trade in XLE is attractive sub 58 and a long trade is attractive above 62-63. Keystone does not hold any positions in the energy sector currently. Each day that XLE does not move back above 62.43 is another nail in its coffin and the Armageddon scenario becomes more likely. 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.

Note Added Tuesday Morning, 12/31/19, at 7:35 AM EST: US stocks are soggy in the Monday trade. XLE retreats -0.3% to 59.70. The drama and suspense in the energy space continues as a major decision and price direction commitment is on tap.

Note Added Wednesday Morning, 1/1/20: Happy New Year. The XLE is at 60.04.