Chart of the week – SPDR Energy Select Sector ETF
US energy stocks on a tear for further potential upside
Medium-term technical analysis
Source: CMC Markets
- US energy (oil & gas) related stocks as represented by the SPDR Energy Select Sector ETF (XLE) has managed to outperform the US stock market where it staged a stellar weekly double-digit gain of +10.34% for the week ended 6 May 2022 versus weekly losses of -0.21% and -1.25% printed on the S&P 500 and Nasdaq 100 respectively on the backdrop of higher oil prices. In addition, the 2022 year-to-date performance of XLE as at 6 May stands at +44.91% versus a dismal negative return of -13.50% seen on the S&P 500; a significant margin of outperformance by XLE.
- Key technical elements are now advocating for another potential leg of accelerated impulsive up move sequence. Bullish bias above 71.00 key medium-term pivotal support for a further potential push up towards the next resistances at 86.90 and 91.80/92.70 (upper boundary of the accelerated ascending channel & a cluster of Fibonacci extension levels).
- On the other hand, a daily close below 71.00 invalidates the bullish tone for a multi-week corrective decline within its major uptrend phase towards the next support at 59.40.
- Positive elements; price actions have staged a bullish breakout with a weekly close above the former major range resistance of 78.45, ended with a weekly “bullish Marubozu” candlestick pattern and momentum bullish breakout as seen on the daily RSI oscillator (bottom of the chart) that has cleared above its former corresponding descending resistance from its overbought region.
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