Chevron (CVX): Elliot Wave Analysis and Future Outlook

Chevron (CVX): CVX

Examining Chevron's charts, starting with the weekly chart, we believe the first cycle concluded at the level of $120 in July 2014. That's quite some time ago. Since then, we've also developed Wave II at $51.60, coinciding with the COVID-19 low, marking the end of Wave II. From there, we've constructed the initial impulse waves upwards: Waves 1, 2, and 3. In our view, Wave 4 has not yet concluded, and there are reasons to believe this count cannot be adjusted otherwise. It's possible to count it differently, but we don't find it logically compelling. Looking post-COVID-19 low from $51.60, we've observed Waves 1 and 2, followed by a five-wave structure leading to Wave 3. What's interesting here is the absence of a five-wave impulse upwards, indicating Wave 4 is not yet complete. We also don't believe that Wave 4 lies at the level of Wave ((a)), a possible scenario, but not one we subscribe to. Given the sharp nature of Wave 2, as opposed to a sideways movement, we anticipate Wave 4 to be more extended and prolonged in time, likely moving sideways.

On a shorter time frame, since the all-time high of $189.68, we expect to see a five-wave structure moving downwards. Having completed Wave (iii), Wave (iv) should now stabilize between the 38.2% and 50% levels, potentially leading to an uptick in the coming days without significantly breaching the level of Wave (i). This would invalidate our analysis, marked in red as our invalidation line. If we exceed this, we'll need to reconsider our count. Until then, we anticipate a decline to complete Waves (v), ((c)), and 4.

Comment:

We're taking a short position on Chevron because, as the saying goes, we repeat what is most probable. We've now entered our Wave (iv) zone of 38.2-50%. Now, we've bounced off the 138% level for our subordinate Wave C. Thus, we believe we should soon conclude this Wave 4 within this zone. We can extend up to a maximum of 161.8%. Anything beyond would be unusual and potentially invalidate our scenario. For Wave (v), we then anticipate potentially reaching the level noted for Wave 4, around the 38.2% mark, close to $138.