Gasoline Awaits A Major Move

Gas Prices (both commodity and retail) have been range bound for the past two years or so. It’s trended both up and down pretty well in the range. However, I think gas prices are setting up for a major move soon. I’m not predicting one way or the other, but the way it has been setting up technically means that we should be seeing a big move up or down. A case can be fundamentally made for both (Mid-East disruption, Global Recession, etc). But I’m here  to take a technical look.

The Chart

Below is a monthly chart of RBOB Gasoline dating back to late 2005. I have a few technical lines drawn. First let’s take a look at the two horizontal lines. We have major support (green line) at ~$2.50 and heavy resistance (red line) at ~$3.40. Next you will see two teal (light blue) diagonal lines. As you see, there is a symmetrical triangle formed here.

What we should watch for is a break (and close) above either side. I think we can see some heavy momentum if we break to one side AND especially if we take out the respective support or resistance. If we were to break-out, I’d be expecting a test of the 2008 highs of ~3.60. If we broke down, I’d look at the 1.80-2.00 range for support.

One other thing to watch for is oil (both brent and crude) for a signal.  Personally, I have a feeling we can see a break to the downside because:

A) A better argument can be made for (either good and/or bad) deflation rather than inflation.

B) The Potential Head & Shoulders Pattern that has formed.

Gas Monthly

 

 

Tags: $RB_F $UGA $USO $CL_F $QU_F

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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