Chevron: A Technical Analysis Lesson and a Trade

• Posted by Greg Harmon
• on August 28th, 2013

The Chevron ($CVX) chart poses an interesting learning lesson which leads to a trade set up and it deals with the Positive RSI Reversal. A Positive RSI Reversal occurs when the the RSI (Relative Strength Index) makes a new lower low in an uptrend while the stock price does not make a lower low. This technical set up targets a rebound higher in the stock price that makes a new higher high and is equivalent to the last move higher off of the RSI low. Very similar to a Measured Move higher. This has now happened twice n the last 3 months in Chevron. Look at the chart for Chevron below. I have removed everything but the price and RSI from the chart to keep it cleaner. You can see the first time that the rebound made a new

high but did not move the full 13.27 points of the prior move, but still almost 90% of it. It currently made a new lower low in the RSI August 21st without the price making a new lower low. If this Positive RSI Reversal plays out it would target at least 127.84 and look for a move to 129.11, equivalent to the last move higher. The symmetry of the last two moves also suggests that it should happen in 4-5 weeks from the bottom or between September 25th and October 2nd. Kind of changes your view that you may have missed it, doesn’t it.

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