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Chevron Nails Gap Fill Just Above Neck Tie, Bounce Plays Out

Chevron Corporation (NYSE:CVX) fell sharply yesterday as all commodities took a hit on a strong jump in the dollar.  Chevron and Exxon Mobil Corporation (NYSE:XOM) to name just a couple, had been on a rampage higher recently.  They were due for a pull back. After I gave the alert to short at an average entry price of $78.57, members were alerted on the gap down to $76.40 today, to cover half for a $2.17 gain.  What was my thinking behind this?  Simply, I was analyzing the charts and figured out where there was a possible short term bounce.  At this level, a bounce was likely and therefore it was wise to take half off the table and put some profit in the pocket.

Why was Chevron going to bounce here? There was a key gap fill at the gap down price today as seen on the chart below. In addition, right below the gap fill was a neck tie.  A neck tie forms when two moving averages or trend lines come to a point at the exact time price hits that point.  With these factors weighed, it was a no brainer cover on half the position.  Congrats to those of you that had this great swing trade.  More to come for sure.  To get more analysis, guidance and swing trades, join the Research Center.

Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com