Chevron Corporation is a top player in the energy industry, managing everything from extraction to retail. On Monday, its stock price jumped over 5%, with trading volume more than tripling. This rise was driven by positive developments in Venezuela, where Chevron’s existing infrastructure puts it in a strong position. On a technical note, Monday’s stock increase broke above a long-term downward trendline that has existed since late 2022. To confirm this breakout, the stock needs to keep its momentum and close above Monday’s high on Tuesday. If it can do this, the next target will be the resistance level at $168.96.

Potential Breakout and Target Levels

Clearing this resistance will validate the breakout, turning the old trendline at $159.84 into primary support. If the stock pulls back to this level, it could be a good buying opportunity. This setup indicates a promising trade potential with a target price of $177.35. However, caution is necessary, as the situation in Venezuela is still evolving. If the stock drops back below the declining trendline, the upward trend would be invalidated. The 5% spike in Chevron’s stock on January 5th, 2026, has led to a rise in short-term implied volatility, making options more expensive. Traders should use clear strategies when approaching this situation. The increase was caused by confirmation that the Venezuelan government has given Chevron more control over important joint ventures, a much more reliable development compared to the speculation of 2025.

Trading Strategies Amidst Volatility

If the stock closes above yesterday’s high, a bullish position makes sense with a target of $177.35. Given the increased volatility, we should consider buying call debit spreads, like the February 2026 $170/$177.50 spread. This will help keep our costs and risks in check, allowing us to benefit from the potential price rise while offsetting the impact of high option premiums. If momentum slows and the stock pulls back to the old trendline around $159.84, a different opportunity arises. This would be an ideal point to sell cash-secured puts or put credit spreads with a strike price near $160. This strategy allows us to benefit from high volatility while establishing a good entry point at a solid support level. However, we must be mindful of the risk that the breakout could fail, especially considering the political instability we observed in the region last year. A daily close below the $159 trendline would invalidate the bullish setup. In that case, we would exit any long positions and may consider initiating bearish positions by buying puts. This breakout is supported by new estimates indicating that the Venezuelan deal could add over 50,000 barrels to Chevron’s daily production by the third quarter of this year. This fundamental boost comes as Brent crude prices have remained steady, trading above $90 a barrel for the past three months. This stability provides a stronger basis for the current stock movement compared to the OPEC-driven volatility we encountered in 2024. Create your live VT Markets account and start trading now.

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