Energy ETF (ERX) Flashes Possible Bullish Sign
The dramatic fall in oil prices over the last few weeks has garnered a lot of attention from the financial media. Oil prices dropped for 12 straight days which marked a record losing streak.
There were numerous factors behind the decline—supply and demand imbalances, political pressure, and production level disagreements are just a few.
Regardless of how things play out in the long run, there is a short-term pattern on the chart of the Direxion Daily Energy Bull 3X Shares (NYSE: ERX) that suggests a bounce may be in the works.
The fund dipped down to the $22 level on Thursday and then moved higher later that day and on Friday as well. The $22 area served as a low on October 29 and seeing these two low points in close proximity indicates a possible double-bottom pattern.
For the pattern to be confirmed, the fund would need to move above the high in between the two lows. In this case the high came at $29.05 on November 8. If the ERX does bounce back above the previous high, it would mean a 15.6% gain from the close on Friday.
One thing to keep in mind with the ERX is that it is a triple-leveraged ETF and that leverage works in both directions. If the energy sector moves up 1%, the ERX should move up 3%. If the energy sector moves down 1%, the ERX should move down by 3%. At least that is how the fund is designed to work.
Something I have noticed about the ERX is that the 3-to-1 leverage doesn’t hold up as well over the long run as it does on a day to day basis. The 3-to-1 relationship holds up much better over the short term. If you are going to invest in the ERX, you should be aware of this relationship.
ERX sees its Stochastic Oscillator recovers from oversold territory
On July 03, 2025, the Stochastic Oscillator for ERX moved out of oversold territory and this could be a bullish sign for the stock. Traders may want to buy the stock or buy call options. Tickeron's A.I.dvisor looked at 61 instances where the indicator left the oversold zone. In of the 61 cases the stock moved higher in the following days. This puts the odds of a move higher at over .
Technical Analysis (Indicators)
Bullish Trend Analysis
ERX moved above its 50-day moving average on June 09, 2025 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for ERX crossed bullishly above the 50-day moving average on June 11, 2025. This indicates that the trend has shifted higher and could be considered a buy signal. In of 19 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where ERX advanced for three days, in of 365 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 276 cases where ERX Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The 10-day RSI Indicator for ERX moved out of overbought territory on June 23, 2025. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 42 similar instances where the indicator moved out of overbought territory. In of the 42 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Momentum Indicator moved below the 0 level on June 25, 2025. You may want to consider selling the stock, shorting the stock, or exploring put options on ERX as a result. In of 95 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for ERX turned negative on June 25, 2025. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 41 similar instances when the indicator turned negative. In of the 41 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where ERX declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
ERX broke above its upper Bollinger Band on June 10, 2025. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
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