Cycle Trading

• XLE stretched above the 10 day moving average on day 7 of the cycle.
• Price now testing major resistance at 92.
• Rejection + swing high + close below 10 day moving average → daily cycle decline risk.
• Break above 92 → continuation of daily uptrend + cycle band buy signal.
• Energy sits at a major decision point.

The rally out of the recent DCL pushed XLE sharply higher, stretching price above the 10 day moving average on Thursday, day 7.

But XLE is now pressing into the major 92 resistance level—the same area that rejected price during the previous daily cycle and sent XLE into its decline. This is a natural place for the advance to pause, allowing the 10 day moving average time to catch up to price.

A rejection at 92, especially if paired with a swing high and a close back below the 10 day moving average, would put XLE on track for a left-translated daily cycle and signal the start of its daily cycle decline.

However, XLE remains in a daily uptrend, and the bulls still control the tape. A decisive breakout above 92 would confirm continuation of the uptrend and trigger a cycle band buy signal.

This is a key inflection point for the energy sector, and the next move out of this level should set the tone for the remainder of the cycle.