Leveraged energy ETF hits resistance at 50-day moving average, gets high confidence bearish signal
Oil prices have been climbing over the last few weeks as tensions between the United States and Iran have created concerns about possible disruptions in the market. Since hitting a low of $50.72 a barrel on June 12, West Texas Crude jumped to a high of $58.22 on June 24. The rally in oil prices has caused a number of energy related ETFs to jump as well.
The Direxion Daily Energy Bull 3X Shares (NYSE: ERX) has rallied from the $15.50 level to a high of $20.11 on June 21. The rally has brought the ERX up to possible resistance at its 50-day moving average. As you can see on the daily chart below, the trend line acted as support on pullbacks in February and March and it could now act as resistance.
In addition to the possible resistance, the daily stochastic readings are extremely overbought and they made a bearish crossover on June 24. The indicators reached their highest level since February.
The Tickeron Trend Prediction Engine generated a bearish signal on the ERX on June 20 and that signal had one of the highest confidence readings I have seen at 90%. The signal calls for a drop of at least 4% over the next month. In addition to the extremely high confidence level, 100% of past predictions on the ERX have been successful.
Momentum Indicator for ERX turns negative, indicating new downward trend
ERX saw its Momentum Indicator move below the 0 level on May 06, 2025. This is an indication that the stock could be shifting in to a new downward move. Traders may want to consider selling the stock or exploring put options. Tickeron's A.I.dvisor looked at 97 similar instances where the indicator turned negative. In of the 97 cases, the stock moved further down in the following days. The odds of a decline are at .
Technical Analysis (Indicators)
Bearish Trend Analysis
ERX moved below its 50-day moving average on April 03, 2025 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for ERX crossed bearishly below the 50-day moving average on April 08, 2025. This indicates that the trend has shifted lower and could be considered a sell signal. In of 18 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
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 .
Bullish Trend Analysis
The RSI Indicator points to a transition from a downward trend to an upward trend -- in cases where ERX's RSI Indicator exited the oversold zone, of 23 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Stochastic Oscillator is in the oversold zone. Keep an eye out for a move up in the foreseeable future.
The Moving Average Convergence Divergence (MACD) for ERX just turned positive on April 24, 2025. Looking at past instances where ERX's MACD turned positive, the stock continued to rise in of 43 cases 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 366 cases, the price rose further within the following month. The odds of a continued upward trend are .
ERX may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
The Aroon Indicator entered an Uptrend today. In of 271 cases where ERX Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
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