XLE could be forming a Falling Wedge that would conclude a Zig Zag from the June 2014 high.
For the time being it is just a potential pattern but it is worthwhile to keep an eye on the price action and maybe get involved.
If there is a chance that this pattern plays out lets establish few requirements:
- It would be preferable that Monday's lod holds (Marking a higher low)
- Price has to breach the Resistance 1 located at 56.50
- If the wave (IV) of the Falling Wedge were underway it must overlap above 58.74 and fail at the upper trend line. It would mean a rally of 10% +/-
Curiously enough in the 60 min time frame we can see that XLE if the support at 53 is not breached has a potential Inverted Head & Shoulder which has a measured target at the upper trend line of the assumed wedge.
Maybe there is a potential long set up.