CVX Stock – Chevron Corporation Is Calling All Bulls

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Shares of integrated oil company Chevron Corporation (NYSE:CVX) have largely moved sideways over the past month, and while CVX stock likely will remain capped over the next few months, a near-term breakout trade looks to be in the making.

Beat the BellToday, we’ll talk about what traders should be looking for before buying Chevron stock.

When I last discussed CVX on May, I said that shares had reached technical resistance and that chasing the stock higher from there looked like a low-probability strategy. But I also said we shouldn’t short CVX stock until a bearish reversal took place, and that hasn’t happened so far.

What has happened is that Chevron largely consolidated in time (sideways) as opposed to in price (lower), and this movement increasingly is pointing to another push higher in the short-term.

CVX Stock Charts

Chevron’s multiyear weekly chart shows that shares still are capped by their down-sloping 100-week simple moving average (blue). Note how good a reference line this has been since 2011, where it held as support until the stock broke below it in 2014.

While this moving average will hold as resistance until it doesn’t anymore, investors should respect the idea that the longer CVX stock consolidates below this MA, the better the odds of an eventual break above it — and a move toward the red 200-week MA. The 200-week moving average currently resides around the $110 mark.

Chevron CVX stock chart weekly
Click to Enlarge

On the daily chart, we see that much like when I discussed CVX stock on May 3, the stock remains at horizontal resistance (as marked by the blue bar) as well as at the 50% retracement of the entire selloff from the 2014 highs down into the August 2015 lows.

But as discussed on the above multiyear chart, instead of seeing any downward pressure, Chevron stock over the past month has consolidated nicely in a sideways range that also held its yellow 50-day moving average as support.

Chevron CVX stock chart daily
Click to Enlarge

Based on the price action over the past few days, the path of least resistance for CVX stock increasingly appears to be up. If Chevron can push above the $102.60 area on a daily closing basis, then technically it would be breaking out of the bull flag formation that marks this monthlong consolidation phase.

Upon a confirmed breakout, active investors and traders should look to play CVX stock to the long side, using a first upside target around $110 while respecting any sharp bearish reversals.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/05/cvx-stock-chevron-corporation-bulls/.

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