Technical analyst Chris Kimble looks at the chart of a major oil exploration ETF and finds a potential bullish breakout in the works.
The chart above looks at Oil & Gas Exploration EFT (XOP) over the past 8-years.
From 2010 until 2013 it looks to have created a pennant pattern (series of higher lows and lower highs). Once resistance was taken out at (1), buyers came forward and XOP rallied nearly 30% in the next couple of years.
Over the last few years, XOP looks to be creating another pennant pattern. The top of the pattern comes into play as resistance just above current prices at (2).
If XOP can breakout at (2), it should attract buyers similar to 2013. Keep a close eye on this pattern, as pennants often frustrate both bulls and bears and large moves take place once the pattern breaks.
The SPDR S&P Oil & Gas Explore & Prod. ETF (XOP) was unchanged in premarket trading Wednesday. Year-to-date, XOP has gained 1.91%, versus a 1.25% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Kimble Charting Solutions.