Chevron-Texaco (CVX): Daily Bullish Complex Indicator Structure

The chart in Figure 6.6 shows an excellent complex RSI structure, as the stock formed a distinct W-type pattern in the extreme oversold area under the 30 level.

Figure 6.6.

It is important to note that the critical divergence stage begins after the completion of the complex Relative Strength reading. After a period of consolidation, the indicator stabilizes while the price action continues to decline. Although the price action may seem to be maintaining its current downtrend, valid complex bullish RSI structures usually trigger a reversal sooner rather later. However, these structures mark critical support levels well before a potential change in the overall direction, but this situation typically requires a secondary retest before completing the reversal.