A couple of weeks ago, we warned that energy stocks could be in trouble. We’ve followed and analyzed the trend higher for oil and commodities, and we are now on technical support watch and concerned about commodities breaking down.
Today we revisit the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP) to highlight our concerns.
The chart below is a monthly chart, and, as you can see, the XOP has been in a long-term downtrend marked by each (1). Price has formed lower highs and lower lows for the past 12 years.
The latest rally attempt has taken the price to the top of the trend channel at (2) while also forming a bearish rising wedge pattern. This 800-pound resistance has seen a monthly bearish reversal, as well as follow-through selling with many oil bulls concerned.
Price is starting to fall below the up-trend support line at (3). If the price holds below this support, it would suggest lower prices for energy stocks. Stay tuned!