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Asset Watch
Thursday, July 14, 2022
The last four times the XLE ETF reached or fell slightly below its 200-day MA, short and long-term rallies followed. Therefore, the downside is minimal if the XLE ETF can hold the line. If crude recoups some of its losses, the XLE ETF should follow suit.
In contrast, a material drop below the 200-day MA ($68.19) could provide us with a profitable shorting opportunity. If the XLE ETF breaks down, support becomes resistance, and the shorting window is open until the XLE ETF proves otherwise. This means the right trade depends on whether the XLE ETF stays above this key level.
So, with the XLE ETF now in fight or flight mode, should we trade around the 200-day MA?
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