The SPDR S&P Oil & Gas ETF (XOP) Could Be Ready For A Major Bounce

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From Chris Kimble: Oil Drillers have had little to smile about over the past years. Could this trend be about to end? A pattern is in play that highlights a counter trend rally could be near.

Below looks at the Oil Drillers (XOP)/S&P 500 Ratio over the past couple of years:

The ratio could be creating a double bottom at line (1), near the apex of a potential bullish ascending triangle at (2), as momentum is oversold and could be creating higher lows at (3).

Below looks at ETF XOP:

Drillers have had little to smile or brag about since 2014 highs, as XOP has declined nearly 65%. If XOP can breakout above resistance of the falling wedge pattern, it could become attractive to the bulls and create a counter trend rally.

If XOP breaks below support of the falling wedge would suggest that the downtrend remains in play. We like the looks of this pattern on a risk/reward basis.

The SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP) was unchanged in premarket trading Thursday. Year-to-date, XOP has declined -25.00%, versus a 11.48% rise in the benchmark S&P 500 index during the same period.

XOP currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #17 of 37 ETFs in the Energy Equities ETFs category.

This article is brought to you courtesy of Kimble Charting Solutions.