Chevron Plunges 4.46% as Bearish Break Below Key Support Sparks Downtrend Fears

Chevron (CVX) closed the most recent session at $156.54, down 4.46%, forming a bearish candlestick with a long lower shadow. This decline aligns with a breakdown below key support at $156.54, which previously acted as a dynamic resistance level during late December rallies. The price action suggests a potential continuation of the bearish trend, supported by a bearish engulfing pattern observed around mid-December. Key Fibonacci retracement levels indicate critical support at $150.25 (61.8% retracement of the October–December rally) and $143.19 (78.6% retracement). A break below $150.25 may target $143.19, where prior consolidation occurred in late April and May.

Candlestick Theory

The recent price action features a dark cloud cover pattern near $163.85, with the close near the session low. This, combined with a breakdown below the 200-day moving average ($155.9), reinforces bearish momentum. Key support levels are identified at $150.25 (psychological round number and prior trough) and $143.19 (major swing low). Resistance remains at $163.85 and $165.75, with failure to reclaim these levels likely to extend the downtrend.

Moving Average Theory

The 50-day ($155.9), 100-day ($153.32), and 200-day ($155.9) moving averages confirm a bearish bias, with the price trading below all three. A crossover of the 50-day below the 200-day (death cross) in late January signals a medium-term bearish shift. However, the 100-day MA crossing above the 200-day MA in late November suggests a potential short-term bounce, though this remains invalidated by the recent sharp decline.

MACD & KDJ Indicators

The MACD histogram has turned negative, with the line crossing below the signal line in late January, confirming bearish momentum. The KDJ (Stochastic) oscillator shows oversold conditions (K=23, D=30), but the divergence between K and D (K falling faster) suggests weak bearish conviction. A rebound in K above D may indicate a short-term rally, though this would require volume confirmation.

Bollinger Bands

Volatility has expanded, with the recent price near the lower Bollinger Band ($147.185). This contraction/expansion pattern suggests heightened bearish pressure, but a reversal above the middle band ($155.9) could signal a countertrend bounce. The bands’ width has widened since late December, aligning with increased volatility during the recent selloff.

Volume-Price Relationship

The recent 4.46% drop was accompanied by elevated volume ($20.56 million shares), validating the bearish move. However, volume has declined in subsequent sessions, indicating waning bearish conviction. A surge in volume during a rebound above $156.54 would strengthen bullish validity, while a lack of volume could signal a false breakout.

Relative Strength Index (RSI)

The RSI stands at 28, entering oversold territory, suggesting a potential rebound. However, this must be interpreted cautiously, as the RSI has remained below 30 for three consecutive sessions, indicating a strong bearish bias. A close above 35 would improve bullish odds, while a retest of the 20–25 range may trigger further selling.

Fibonacci Retracement

Applying Fibonacci levels to the October 13–December 5 rally ($143.19–$165.75), key levels at $155.9 (38.2%), $150.25 (61.8%), and $143.19 (78.6%) define critical support zones. The current price near $156.54 suggests a potential bounce from the 38.2% level, but a break below $150.25 would validate a deeper correction toward $143.19.

Confluence and Divergences

Confluence is observed at $150.25, where Fibonacci support aligns with prior price action and moving averages. Divergences include the KDJ’s weak oversold signal and the RSI’s prolonged sub-30 reading, which may delay a rebound. Probabilistically, a continuation below $150.25 is more likely than an immediate reversal, but volume dynamics will be critical for confirming sustainability.