Unleaded Gas is precariously perched on trend line support identified by Autochartist as the underside of a classic Rising Wedge chart pattern. The pattern is shown here on the hourly candlestick chart. Traders will be watching closely for a potential failure at the current levels for a sell signal to set up.
The last retest of the Rising Wedge resistance occurred at the $4.28 per gallon level. The subsequent retest of support added significant clarity to the developing pattern, which now scores a maximum 10 bars in both Initial Trend and Uniformity. Since then the price has been inching higher while hugging the trend line, the Rising Wedge is likely to reach a completion point before the end of the week.
A minor drop from the current level price level would be sufficient to break support and initiate a downside forecast. If this occurs, the move could be quite significant given the nearly 30-cent price increase the market has enjoyed since the Rising Wedge chart pattern began developing.
Alternatively, the trend line may continue supporting the price and propel it towards one more test of the resistance at the top of the wedge. This would bring the market above the $4.34 per gallon level and invite the possibility of a breakout to above the pattern and onward into new highs.
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