Chevron Could Be Squeezing from its Lows
Big tech stocks have gotten a lot of attention lately, but another theme has been cyclicals rallying off intermediate-term lows. Some of June’s bigger gainers, like Carnival and Delta Air Lines, advanced from these patterns. Today’s idea considers whether Chevron could follow a similar path.
We’ll start by identifying the two potentially key ingredients preceding the upside moves. First is a basing pattern near an intermediate-term low. Second is improving price momentum prior to the breakout (measured with the 9-day Rate of Change). Some of the charts in question also breached falling trendlines.
Now consider how CVX hit a five-month low of $150 in March. It then bounced and held the same level twice in June. Does that represent an intermediate-term bottom?
Second, the Rate of Change (ROC) oscillator has inched higher since early May. That may suggest sellers are losing control, even without the bulls yet clearly in charge.
Traders could now eye the mid-June high around $160.77 as a potential breakout zone. The closeness of the recent low around $150 may also create a threshold for risk management.
Finally, the macro backdrop may favor CVX. Cyclical groups like industrials, transports and materials outperformed last month as recession fears diminished. Investors looking for that pattern to widen may target energy given the tight oil inventories and the sector’s link to economic activity. Energy could also be active with an OPEC meeting this week.
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We’ll start by identifying the two potentially key ingredients preceding the upside moves. First is a basing pattern near an intermediate-term low. Second is improving price momentum prior to the breakout (measured with the 9-day Rate of Change). Some of the charts in question also breached falling trendlines.
Now consider how CVX hit a five-month low of $150 in March. It then bounced and held the same level twice in June. Does that represent an intermediate-term bottom?
Second, the Rate of Change (ROC) oscillator has inched higher since early May. That may suggest sellers are losing control, even without the bulls yet clearly in charge.
Traders could now eye the mid-June high around $160.77 as a potential breakout zone. The closeness of the recent low around $150 may also create a threshold for risk management.
Finally, the macro backdrop may favor CVX. Cyclical groups like industrials, transports and materials outperformed last month as recession fears diminished. Investors looking for that pattern to widen may target energy given the tight oil inventories and the sector’s link to economic activity. Energy could also be active with an OPEC meeting this week.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Important Information
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates.
Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: https://www.tradestation.com/important-information.
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