Recently, the Chevron Corporation (NYSE: CVX) reported its earnings for Q2, which came as a big disappointment in comparison to the Q1 figure. The latest report showed a loss of $8.3 bn of net income, whereas Q1 showed a gain of $3.6 bn. However, investors should not forget that Q2 was a difficult one for all, due to oversupply of oil, forcing the price per barrel to slide significantly. There were also tensions between Saudi Arabia and Russia, which kept the price under pressure. It was also a difficult quarter for some other big oil company names like BP and Shell, which reported losses of $16.9 bn and $18.1 bn respectively. If we compare Chevron’s Q2 results to those major oil market players (as per market cap), then the company managed to do relatively better. Also, on the positive note, the company recently managed to take advantage of the March downturn in the market and went shopping for other oil companies. Chevron acquired Australia’s Puma Energy and US Noble Energy.
Looking at the technical picture of the Chevron’s stock, we see that after finding support near the 81.51 hurdle in the end of July, CVX reversed to the upside and is now trading above a short-term tentative upside support line taken from the low of July 31st. This week, the stock moved even more to the upside, where it tested the area near the 93.00 barrier, which continues to provide resistance from the end of June. Although the stock corrected back down, still, it remains above that upside line. As long as it stays intact, the near-term outlook could stay positive. But in order get a bit more comfortable with higher areas, a break of the 93.00 barrier would be needed.
A strong move higher and a break above the aforementioned 93.00 zone would confirm a forthcoming higher high and may clear the path for larger extensions higher. The stock might then travel to the high of June 16th, a break of which could set the stage for a drive to the 97.56 hurdle, marked by the low of June 10th.
The RSI and the MACD are pointing slightly to the upside. In addition to that, the RSI continues to run above 50 and the MACD remains above zero and its trigger line. Both indicators show increasing upside price momentum, suggesting that more upside might be in the works.
Alternatively, if the upside line breaks and the price falls below the 89.18 hurdle, marked by yesterday’s low, that may spook new buyers from entering any time soon, as such a move could increase the stock’s chances of drifting lower. CVX might then travel to the 87.62 obstacle, a break of which could open the way to the 85.75 level, marked by the low of August 7th.
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