Energy: The Best Trade in 2026 Energy is quietly setting up for its next major move higher. After nearly four years of range-bound frustration, energy stocks are finally starting to wake up. The behavior is changing, and the tape is beginning to tip its hand. Bullish evidence keeps stacking up. With volatility compressed to multi-year lows on the monthly Strazza Indicator and momentum improving, the stage is set for a potentially explosive resolution. Remember, when volatility contracts this much, it often precedes wild, aggressive moves in either direction. That's exactly what we're seeing in the Energy Sector ETF $XLE. |
Price is coiled near historical levels, buyers are consistently absorbing overhead supply, and every test of the range makes the next move more likely and more powerful. The base is tightening, and pressure is building for a breakout. Above 50, energy is ready to roar and we have to lean in hard. When we look at the two largest oil and gas companies in the world — Exxon Mobil $XOM and Chevron $CVX — the story is very similar. Exxon has spent the last three years digesting gains above former highs, pressing against new all-time highs while volatility sits near multi-year lows. |
All the pieces are in place for a major breakout. Then we have Chevron, which is trapped in a massive multi-year coil, pinned by converging VWAPs. |
The longer this builds, the more fuel there is for the eventual move. If these two leaders break out, it's hard to see how the rest of the energy complex doesn't follow. Energy is shaping up as a major rotation — 2026 may be when it finally pays off. I've been increasing exposure — picking up calls in $XOM, $SLB, $COP, and last Friday we bought some $CVX calls for Breakout Multiplier. We're likely to be able to sell the double this morning… If you want access to these trade ideas as they develop, join Breakout Multiplier risk-free and get the details. Hope you had a great weekend — I know I did 😉 Alfonso De Pablos, CMT Director of Research, All Star Charts |
Alfonso De Pablos, CMT | Director of Research, All Star Charts |
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