Gasoline Technical Analysis and Short-Term Forecast
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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.
