Analysis Test $XLE

Today's post will be short as it is midnight but it is for yesterday.

I've covered my analysis on wins and losses, I mentioned I'll try to take the lessons from both and apply them to the next trade. Now, I don't want to make a trade tomorrow as I haven't spent enough time looking at charts today and don't want to make an uninformed decision. However, I did look at $XLE and will like to see it as a case study where I don't invest money, but want to track it.

Let's look at the chart below for the past month and draw some conclusions.

In the last two posts I mentioned that I'd look at 14-20 day window to identify a channel for my next trade. Hence, the channel in the chart spans from January 13 - February 2. Am I a fan of this channel? a partial one, I think the price is quite steady but the range between support and resistance is a bit tight. The defined support sitting at ~$47.60 and resistance at ~$49.80, that's only $2.20 difference.

Either way, in the above chart, the channel is defined and I'm seeing what I observed in my wins analysis, after the support is tested, the RSI remains in the middle zone, then this indicates a surge in price for the coming days. We see this happen on January 21. On January 29, there was a high reached of $51.73 and when looking at the RSI, we see that it crossed the overbought mark. This part is key in the analysis, we saw the recalibration happen on January 20 and February 2 (today).

I find it a bit interesting that the price didn't close within the channel, it closed just above the resistance. However, the selling volume controlled this stock today and we see the RSI sitting around 48. At this moment, I think $XLE will be a bit neutral, at least for the next couple of days. I can see $XLE hang around $49-51, I say this because I'm seeing that the volatility for this stock isn't as strong. Tomorrow I will monitor the price and include a diagonal channel as well to determine whether the remainder of the week is bullish or bearish.

I think I want to study $XLE closely this week to determine if it's a good buy based on my analyses.