Recovering share prices, political protests in Saudi Arabia, and a drop in US Crude Oil inventories all served to create an updraft in the Unleaded Gas Index this week. As the fundamental backdrop lent support to the market, the technical picture improved rapidly as far as near term forecasts are concerned.
Unleaded pushed through the $3.85 per gallon resistance after a sharp sell-off early in the week, with the current reversal signaling a breakout from a bullish Falling Wedge chart pattern. This wedge has been developing for several weeks as the market veered lower to its recent bottom of $3.73 per gallon.
The breakout from the wedge occurred on strong momentum and solid follow-through, with the price rising to test the $4.00 per gallon level by the close of Wednesday's session. The projected price target from the initial breach of resistance suggests this move will continue onward above the $4.00 mark. The forecast minimum rests at $4.02, with an upper end of the range as high as $4.24 also presented.
A move back below $3.76 per gallon would be needed to revert the technical picture back to neutral from the current bullish stance.
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