XLE-WTI correlation; cue to XLE Cup and Handle 2-year breakout

11 thg 6, 2018

XLE and WTI demonstrate high level of correlation i.e. move in same direction. XLE provides stock-ETF alternative for traders who do not trade WTI. Interesting to note that WTI has outperformed XLE since Q4 2017 while the latter was capped at a 2-year high printed in December 2016.

Bullish view of WTI and XLE

in previous piece I was looking for swing long WTI as a continuation trade. I see it sitting at potential support. At same time XLE is capped at 2-year high resembling a cup and handle pattern. If WTI long continuation is correct, XLE may do a breakout above this resistance. In fact there is room for XLE to catch up since it is underperforming WTI in the near term.

Bearish alternative

There is a bearish view. When correlation is found question is always which is correct A or B? What if WTI is bearish? Then XLE resistance is justified and the current underperformance would be easily justified as a divergence.


I stick to the bullish view.

11 thg 6, 2018

Ghi chú

Drawings in this chart is messed up. Screencap linked here is better.

13 thg 6, 2018

Ghi chú

Opec meeting on 22 June 2018. opec.org/opec_web/en/311.htm

22 thg 6, 2018

Ghi chú

OPEC has a deal. WTI up to 67.46 at this moment. Keep eyes on XLE cup and handle. zerohedge.com/news/2018-06-22/we-have-deal-principle-opec-agrees-real-production-increase-600000-barrels-day