Amidst continued strength in the energy complex, Unleaded Gasoline has been building a potential basing pattern that could break out early in the trading week ahead. The market has been in a steady uptrend following crude oil's performance, and finished Friday's session near the top of a very large Ascending Triangle chart pattern.
The market has pressed the upper edge of the Ascending Triangle repeatedly, and will likely punch through the top in sympathy with any rally in crude oil from the current levels. The pattern, illustrated here on the hourly candlestick chart, has been developing over the last 147 bars, making it a fairly lengthy pattern with a potentially high target forecast on a breakout.
Traders will be watching the market for signs of a push higher, in which case momentum buying could propel the market well above the pattern. A weak open and lack of follow through would bring another retest of the bottom end of the triangle, currently resting near $4.35 per gallon. A failure of the support level would signal the market is not yet ready to break through the resistance, and open the door for a downside breakout and short term price retracement.
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