Here are three things the technical set-up is telling us about the S&P energy SPDR ETF, XLE:
1) The dominant, multi-month downtrend from last December’s 11-month rally high at 78.45 (12/12/16) remains intact, and is the most significant technical influence on price action.
2) From a nearer term technical perspective, however, the most recent “lower-low” in XLE at 63.29 (7/07) was not confirmed by my intermediate term momentum gauges, which serves as an amber alert that downside price intensity is slowing ahead of a potentially tradeable rally period.
3) To trigger a meaningful, sustainable upside price reversal signal, XLE must climb above heavy, consequential resistance (supply) lodged between 66.15 and 66.50. In the absence of such strength, the dominant downtrend will continue to exert downward price pressure.