Cycle Trading

XLE formed a swing high on Friday and then delivered bearish follow through on Tuesday, closing below the 50 day moving average. That close sets up the potential for a left-translated daily cycle formation, suggesting the recent rally may have already peaked early within the cycle.

Despite the weakness, XLE is still holding above the 10 day MA on Tuesday. This shows there is still some underlying support trying to hold in the near term. However, XLE remains in a daily downtrend. A close back below the 10 day MA would confirm a continuation of that downtrend and trigger a cycle band sell signal, aligning with the potential left-translated cycle structure.

For now, energy remains technically vulnerable. The next few sessions will be key in determining whether XLE can stabilize above the short-term support zone or if renewed weakness confirms that the daily cycle has already topped.