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-
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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–
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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 down trend remains in play. We like the looks of this pattern on a risk/reward basis.
