Jul. 12 at 1:25 PM
$CVX Volume 107 of Clarity is out.
The Key Term this week is the undercut and reclaim, and the discipline that separates it from a spring.
An undercut and reclaim occurs when price breaks below a prior shelf, draws out supply, then quickly recovers back above it. That sequence is often the first step toward a spring, but it is not the same thing. A spring requires three parts in order: the undercut, the reclaim, and a lower-volume retest that holds the reclaimed level. The retest is what proves the first recovery was more than short covering.
Chevron is the working example. The July low undercut a known shelf and reclaimed quickly. That gives the chart an early repair signal. The retest has not printed, so the correct label is undercut and reclaim, unconfirmed. The label must wait for the sequence.
$XOM $COP $XLE $CL_F
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Educational only. Not investment advice.
Full disclosure: No positions
