Chevron Corporation, through its subsidiaries, engages in integrated energy, chemicals, and petroleum operations worldwide. The company operates in two segments, Upstream and Downstream. The Upstream segment is involved in the exploration, development, and production of crude oil and natural gas; processing, liquefaction, transportation, and regasification associated with liquefied natural gas; transportation of crude oil through pipelines.
Doing a monthly timeframe supply and demand analysis on Chevron Corporation (CVX) oil related stock we can see a very strong monthly imbalance of supply around $118 per share. The strength of that bearish impulse is quite strong, worth trading if price retraces to it and the trend is still bearish for Chevron Corporation.
One of the most important features of an imbalance is the strength of the leg out, the one on Chevron Corporation around $118 is actually pretty strong. You can see the imbalance in the monthly timeframe attached right underneath.
I’ve read that some investors were thinking of buying shares of Chevron (CVX), Exxon (XOM) and Royal Dutch Shell (RDS.A), well, as supply and demand traders it’s very clear that we should not be thinking of buying shares these oil related stocks for a very clear reason. In a downtrend, new supply imbalances are created and demand is eliminated. Why should we buy if new supply is being created and the stock is dropping like a rock following suit the highly correlated prices of Crude Oil (CL)? It makes no sense, and that’s why most traders will fail to understand and accept.
As supply and demand traders, we should not care much if Oil plunges after fails to reach a deal, or the existing oil wars and fights existing between Opec, Russia, Arab countries and the US. Oil is trading lower after Saudi Arabia slashed crude oil prices, but if we take a look at Royal Dutch Shell monthly timeframe and other oil related stocks worldwide, we will see that it was the most likely direction the oil related stock could move since we had weekly supply in control and a clear downtrend and bearish bias.
Remember that a single timeframe is not enough to make a trading decision. You must put the new imbalances into context and only trade them if a multiple timeframe analysis has been done following supply and demand rules.
This is the kind of price action technical analysis you will learn in our trading community. You will learn how to locate new supply and demand imbalances and trade without using any indicators, no news, no fundamental analysis, no earnings announcements, no volume or VSA analysis. Just supply and demand imbalances.
Trading supply and demand imbalances is ideal for beginners and those with a full or half time job, you won’t need to stay in front of the computer all day long trying to move price action with your mind.
As supply and demand traders, we do not need to pay attention to the news, fundamentals or any earnings reports. Once a big timeframe imbalance has gained control, earnings do just the opposite and react strongly to those imbalances. Why is it that you see positive earnings and then the underlying stock drops like a rock, or a negative earnings announcement and the stock rallies like a rocket out of control? You are probably missing the fact that there are big imbalances gaining control.
Unless you are doing very short term trading and scalping, you should not worry about fundamentals or earnings announcements.
You can use these imbalances to plan your trades in lower timeframes. Trading is just waiting for the right trigger points and scenarios to present themselves, this game has got a name and it’s called the waiting game. We need to patiently wait for the correct scenarios and setups to happen and wait for price to pullback or dip into the price levels we want to trade, in our case these price levels are made of supply and demand imbalances.
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