The Energy Sector is Near a Major Technical Level

The technical picture for the energy sector shows that the price action for this area of the market is near an important inflection point.

Notice how the price has been consolidating over the past two weeks. This is an example of the markets indecisiveness over the direction of oil prices. The price sits just beneath the resistance of a long-term downward price channel. Will we see a breakout or a breakdown?

Here is a closer look at the short-term consolidation. Watch for the price to break above or below this price channel. There might be a profitable swing trade opportunity once the market picks a direction. The long-term trend is downward, so it could be safe to assume that there is a higher probability that this trend will continue.

Smart Money took a big exit last week as there was a big drop in net long positions by crude oil futures traders. Is this a sign of weakness in the black gold?

The health of the energy sector is somewhat dependent on the path of oil prices. If we see a rally or a crash in oil prices, then I would expect the energy sector to follow along accordingly.

I think there will be a good swing trade opportunity very soon in the energy sector. If oil prices make new highs very soon, then I might lean more bullish towards the energy sector. But the long-term trend in oil prices and the energy sector is bearish. So I think there is more of a probability that the bearish trend will continue.

it is interesting to see how commodity futures traders took a big exit from long oil positions last week. This just adds to my bearishness.

Oil prices have been showing more strength over the past several weeks. So, oil prices will be crucial in determining the future health of the energy sector. We need to see more strength in oil prices to be confidently bullish towards the energy sector.

As always, I am not a financial professional, and this is not investment advice. Be careful and be patient. Dont anticipate the market. Rather, participate in the market. Don't invest money that you can't afford to lose. Give some of your investments time and know when to cut your losses.

Don't be greedy. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. Do your own due diligence. And just follow the trends. A trend is your friend. Good luck trading.