Gasoline Technical Analysis and Short-Term Forecast

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Gasoline rose to test and hold the 38 percent retracement of the decline from $2.4072 at $2.199 on a closing basis today. The subsequent move down from $2.2068 helped to form a daily shooting star. This implies that the corrective move up from $2.0702 is probably complete.

Moreover, today’s test of $2.199 likely completed Wave IV of a five-wave trend down from $2.4072. A test of at least $2.155 and possibly $2.140 is favored for tomorrow. The key target for the coming days is $2.121, the 62 percent retracement of the rise from $2.0702 and equal to (1.00) target of the wave down from $2.2068. Settling below this will provide more evidence that the corrective Wave IV is complete and that Wave V is underway.

That said, should gasoline settle above $2.199 the validity of the five-wave count will be called into question. Settling above $2.199 will also warn that the move down is failing and call for a much more substantial test of resistance where the next major threshold is the 50 percent retracement from $2.4072 and 200-day moving average at $2.239.

Gasoline Technical Analysis and Short-Term Forecast

This is a brief analysis for the next day or so. Our weekly Crude Oil Forecast and daily updates are much more detailed and thorough energy price forecasts that cover WTI, Brent, RBOB Gasoline, Diesel, and spreads. If you are interested in learning more, please sign up for a complimentary four-week trial.

Gasoline briefly fell below the 62 percent retracement of the rise from $2.0073 at $2.160 before testing and holding the smaller than (0.618) target of the wave down from $2.3486. The subsequent move up helped to form a daily hammer that warns a test of $2.208 and possibly $2.229 will take place tomorrow.

Nevertheless, it looks as though the move down from $2.4072 is forming a five-wave wave pattern where Wave III is in progress. The most probable stalling points for Wave III are $2.139 or $2.085. At $2.139, Wave I down from $2.4072 will fulfill its larger than (1.618) target. At $2.085, Wave 1/III will fulfill its XC (2.764) projection and Waves 1/III and 3/III will be equal. Taking out $2.169 will call for a test of $2.139, a close below which will call for a test of the $2.115 smaller than (0.618) target of the wave down from $2.480 and then the $2.085 objective. Wave IV is expected to form before taking out $2.085.

That said, today’s $2.1502 low might have been enough to fulfill the $2.139 larger than target of Wave I. Furthermore, holding $2.160 and the formation of a daily hammer warn that Wave IV might already be underway. Closing above $2.229 will confirm today’s hammer and call for a test of the 38 percent retracement of the decline from $2.4072 at $2.248. This is also the 200-day moving average and sits just below the $2.2595 swing low of Wave I. Therefore, for the five-wave pattern to remain intact, $2.248 must hold. Overcoming this will call for a test of $2.279. Such a move would push the potential Wave IV above the bottom of Wave I. This typically implies that the five-wave move has failed and is more likely a nested three-wave pattern instead.

The bottom line for gasoline is that the move down is still expected to extend. However, there is a good chance for a test of $2.208 and $2.229 first. Settling above $2.229 and then $2.248 will call the five-wave count down from $2.4072 into question and reflect a bullish shift in near-term sentiment.