Chart Sketching, ETF, $XLE

Some people have pre-conceived opinions about chart sketching. Some do it exceptionally and even look like an art piece, truly. I honestly haven't learned much about sketching other than the channel and the trend, except it's been based on day price changes. To be fair, I don't think there's such thing as "wrong sketching" if it works for you. I've been doing the "diagonals" on daily trends and if an avid sketcher looks at it, they'd probably laugh. I'll still do it though.

Sketching diagonals on high volatile stocks may seem easier to connect, the reason being, the trends may be more define in shorter periods of times. Enter the ETF – when looking at an ETF, we'll find that the price creeps up slowly or drops slowly. The main reason being that it is a combination of stocks in a specific sector. As a result, the performance of one single stock does not have a great impact in the whole; leading to less volatility.

Although I never mentioned that $XLE is an ETF, this makes sense as to why we see it as a stable asset. When looking at the sketching, we'll have to either zoom in or zoom out.

Let's first zoom out to see the trend from January 8 - February 5. I've sketched a diagonal line to observe the uptrend. Evidently, we can see that the price touches the trend line in 4 lows, each one higher than the previous – indicating uptrend for the past month.

Let's zoom in today's performance.

Looking at the below chart for today, it becomes a bit harder to sketch diagonals. The main reason we see is that the price surged in the morning by $1 and then became stable throughout the day. However, I want to point out that the lowest price from opening and the lowest point at closing follow suit in the sense that we see higher lows.

The RSI today relatively constant, this morning we did see a surge but it re-stabilized. The trading volume was controlled by the buyers again with a ~21M vs ~10M of selling trading volume. So while the overall volume was low, it was still controlled by the buyers. There isn't much pressure for it to be sold. My contract has increased in price, but not enough for me to take good profit on it, my theta is at about -0.0267 which is roughly $2.67 per day for holding this contract. I'm not mad at the price at the moment, it's relatively low as we're a month out.

My overall thoughts:

It feels rewarding to have entered this contract, it feels informed and it feels like learning from previous mistakes and wins has rewarded me. It's true what they say on twitter (X), when you get into the stock market the weekend becomes boring and you can't wait for Monday. Now, I of course need the weekend to rest and reset from my job, but the stock market is personal to me, it's my baby. At this moment, I'm not entirely sure what I'll write about this weekend, since I've been so focused on testing this new approach and tracking $XLE. Either way, I'm sure I'll find something.