Weakness in the equities markets as a result of the ongoing debt ceiling debate in the United States may have helped to knock the wind from the sails of the energy market rally. The crude oil complex set back in Thursday's trading session and the drop did some technical damage to the short term charts. Unleaded Gasoline led the way lower to fall out of its Rising Wedge chart pattern early in the session.
This Rising Wedge pattern, illustrated here on the hourly candlestick chart, has been providing support as the price rose steadily towards new highs. The decline below $4.35 per gallon initiated a downside breakout from the wedge, and generated the lower forecast on strong momentum.
Failure for the price to reverse quickly from these levels may encourage both short selling and profit-taking from speculators who have held long positions through the recent steady rise. If the downward momentum persists to complete the pattern, the minimum price target is projected at $4.2833 per gallon, with the lower end of $4.2164 also possible. A move back higher to $4.38 or higher would be required to negate this bearish pattern and return the market to a sustainable rising support level.
For further information on this and other Autochartist products, visit our website at www.autochartist.com