Exxon, Chevron Set Up Bounce Plays After Slamming Into This Key Level

The oil and gas sector has been on shaky ground amid fears of reduced travel due to the increasing spread of the COVID-19 delta variant, OPEC+ increasing its production and the global goal to ramp up the electrification of vehicles.

Exxon Mobil Corporation XOM and Chevron Corporation CVX have been in a steep decline as a result — but look set to bounce.

On Thursday, both stocks fell into heavy support levels after gapping down, and on Monday, Exxon and Chevron gapped up.

As well as setting up for a reversal on the daily chart, both oil and gas companies have settled into bull flags on the monthly chart.

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The Exxon Chart: Exxon’s stock gapped down 1.55% Friday, slammed into a key support level at $52.10 and bounced. On Friday, the stock tested the area as support again and held above it. This created a bullish double bottom pattern, and on Monday, Exxon gapped up over 2% higher.

On Monday morning, Exxon was battling with a resistance level at the $54.60 level and trying to regain the area as support. If the stock closes the day near the level, it will print a bullish Marubozu candlestick, which could indicate higher prices will come on Tuesday.

When Exxon was trading near the $52 level last week, its relative strength index (RSI) was measuring at about 28%. When a stock’s RSI measures below 30%, it is in oversold territory, which is a buy signal for technical traders. When Exxon’s RSI fell below 30% on July 19, its price corrected 8% to the upside over the following eight trading days.

Exxon is trading below the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day, both of which are bearish indicators. The eight-day EMA is sitting just above Exxon’s share price, and if the stock is able to regain the $54.60 level, it should easily regain the eight-day EMA as well.

The gap up on Monday allowed Exxon to regain the 200-day simple moving average (SMA) as support, which indicates overall sentiment in the stock is now bullish. Bulls will want Exxon to hold above the level on any future consolidation.

Exxon has resistance above at $54.60 and $57.13 and there is support below at $52.10 and $48.78.

The Chevron Chart: Chevron’s chart is very similar to Exxon’s. Chevron gapped down on Thursday and fell into a key support level at $92.86, retested the level again on Friday and gapped up Monday before slamming into a resistance level near the $96.70 area.

Chevron’s RSI hit nearly oversold conditions on Thursday and Friday, which indicated the stock would trade higher to put the RSI back between a more comfortable 30% to 70%. When Chevron’s RSI hit 30% on July 19, the stock bounced up 10% over the following nine trading days.

Chevron is trading below the eight-day and 21-day EMA ,with the eight-day EMA trending below the 21-day. Unlike Exxon, Chevron is trading below the 200-day SMA, which indicates overall sentiment in the stock is bearish.

Chevron has resistance above at $100.58 and $104.05 and support below at $92.86 and $88.80.