In scanning the energy sector, we saw several energy ETFs with bullish basing patterns over the past five to six months. SPDR S&P Oil & Gas Exploration & Production ETF ($XOP) has been in base mode since topping out last October.

Since "undercutting" the prior swing low and finding support at the 200-day moving average in February, $XOP has been acting well and is now forming the handle portion of a bullish cup and handle chart pattern, which is usually a short-term consolidation or pause just below the highs of a base:



The handle, for the most part, is holding above the rising 20-day EMA, with one dip below which found support at the now rising 50-day MA.

The moving averages are now in order, with the 20-day EMA above the 50-day MA, and all three moving averages (20,50,200) trending in the same direction.

$XOP should eventually breakout from this handle and test the base highs on a pick up in volume.

What makes $XOP interesting is the potential for a breakout on multiple time frames. On the the monthly chart below, a breakout above the current base high would also set a new all-time high.



Because of the bullish chart patterns with multiple timeframe convergence, we are placing $XOP on today's watchlist as a potential buy entry. Subscribers of The Wagner Daily should note our exact trade details on today's report. $EWP is also on today's watchlist, as we plan to add to our existing position since it held the 50-day MA yesterday on a pick up in volume.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.