Chevron (NYSE:CVX) surges in the first week of June as optimism over the reopening of the U.S. economic activities grow. From the technical perspective, the big picture reveals a breakout of the consolidation structure that has maintained intact since late April. This advance could drive the energy U.S. company to surpass the psychological barrier of $100 per share.
Once the first decline labeled as wave A of Minor degree in green ended and the price found fresh buyers at $53.01 per share, CVX started to rise in a corrective structure of the same degree that looks like a double three pattern looks incomplete.
According to the textbook, a double three corrective pattern is a combination of two corrective formations connected by another corrective structure. The structural series could be formed by a zigzag, flat, with another zigzag, flat, or a triangle. A double three is characterized by having a 3-3-3 structure; however, this subdivision shouldn’t be confused by an A-B-C sequence. An A-B-C structure could be a zigzag (5-3-5) or a flat (3-3-5).
The current triangle pattern that corresponds to wave (b) of Minuette degree in blue, belonging to wave ((y)) in black, looks complete in the sense that the price action completed its five internal overlapped internal legs. In this context, the re-test of the upper line of the triangle that connects the end of waves b and d of Subminuette degree in green, reveals that Chevron should make a new upward movement.
At the same time, in the chart, we observe that the ascending channel reveals that CVX could advance until the upper-line as a potential target zone. In this context, considering the consolidation region of the first decline, CVX could raise until the area between $105.5 and $111.7 per share. In the region forecasted, the energy company could complete the wave B of Minor degree and start a new downward sequence.
In conclusion, in the short-term, our preferred positioning remains on the bullish side until the price reaches the upper line of the ascending channel.