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XLE - still not clear whether energy bottomed in March 2020
There are two main ways to count the bottom made in mid March 2020
The bearish count is the most common one you can find posted elsewhere.
The reason for that is the way how that strong drop looked like.
It looked like wave 3 that implies price may drop one more time and make a new lower low in the final wave 5 down.
However, we can see that wave 3 down stopped inches above the critical support at 17.59.
There is no much room left for wave 5 down.
Yes, XLE can drop again and drop under that support. That would leave us with a macro (A)-(B)-(C) up topped at 99.73 in June 2020 followed by a macro (W)-(X)-(Y) down.
And even if that critical support is broken under the Bearish count XLE still could rally in the final (A)-(B)-(C) up or wave [ C ] up (structured in an impulsive fashion ).
XLE - Weekly chart updated on 6-08-2020
However, we may attempt counting the drop into the mid March 2020 low as a complete Double Three structure (see below).
XLE - Weekly chart updated on 6-08-2020
Now goes the most interesting part.
The main question here is what should happen to confirm that the mid March 2020 was the major low.
Let’s zoom in to see details of the red BEARISH scenario (see the count below).
The first observation is the CRITICAL RESISTANCE for the bearish count is located at 59.41.
As long as XLE stays under that resistance the bearish count is very well alive.
In addition, we need to focus on the micro structure of the rally.
That move up can be counted in a corrective way. So far it has been following Double Three corrective structure W-X-Y.
In conclusion we should consider two alternatives until XLE goes over 59.41. But even under the bearish count this corrective rally in wave 4 up may extend to 52.30 – 54.60.
XLE - 120 min chart updated at 12-15 PM on 6-08-2020
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