Today’s focus is on Chevron, which is currently struggling just as oil prices continue to face challenges. Chevron has been moving sideways for the past three years, trading within a well-defined range, bounded by a horizontal support marked in green and a descending resistance line marked in black.
Most recently, the price tested the upper resistance line but failed to drop back to the support level, which is slightly positive for the buyers. This pattern indicates that the selling pressure is not as strong as the demand, suggesting that bulls are still in control to some extent. Now, Chevron appears to be approaching the resistance once again, and the fact that we are seeing another test in such a short period of time is bullish, particularly on the weekly chart.
How to trade this setup? If Chevron closes the week above the black descending resistance line, it would confirm a breakout, generating a strong buy signal and indicating a potential bullish continuation. Conversely, if the price bounces off the resistance, forming a shooting star or a bearish engulfing pattern, it would be a short signal, suggesting a reversal and continuation of the sideways trend.