Chevron Corp (NYSE:CVX) shares are trading higher on Monday. Investors are excited about the company’s future prospects in Venezuela now that President Nicolás Maduro has been forced out of office.
* Chevron stock is showing exceptional strength. What’s driving CVX stock higher?
The rally may be short-lived. There is a good chance that if Chevron reaches levels around $169, the rally will pause or stall. This is why it is the Stock of the Day.
Many people think stocks are moved by news related to things such as valuations and future prospects. Sometimes this is true, but sometimes it isn’t.
Stocks can move, and important price levels can form because of people’s emotions. Examples of this can be seen in the Chevron chart.
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In April, there was support around $135. This level was also support in May.
Levels that had been support can become support again because of seller’s remorse.
Some of the people who sold at the support in April regretted doing so when the stock rallied afterward. Many of them decided to buy their shares back if they could eventually get them for the same price they sold.
When Chevron fell back to this price in May, these unhappy sellers placed buy orders. The large concentration of these buy orders created support at the level again.
The mirror image of this dynamic may cause resistance to form around $169. As you can see on the chart, this level was resistance in April.
Many of the people who bought shares there are now experiencing buyer’s remorse because the price is lower. Some have vowed that if possible, they will exit their positions at breakeven.
This means that if Chevron returns to $169, they will place sell orders. If there is a large quantity of these orders, it can cause resistance to form at the level again. This means the rally could stall or pause if it gets this price.
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CVXChevron Corp$164.905.77%OverviewMarket News and Data brought to you by Benzinga APIs
