While much of the world's attention is focusing on the geopolitical events in Egypt and across the Middle East, traders are honing in on two major asset classes in the commodities sector which are responding rapidly to the unfolding crisis. Precious metals, finding strength in a classic flight to safety, and the crude oil complex on fears of possible disruption in deliveries through the Suez Canal
The pressure on Crude has kept US Crude oil above $90, with Brent Crude holding at over $100 per barrel. Likewise, the distillates are holding near recent highs, and the Unleaded Gas futures are currently testing the lower end of a pivotal Channel Up chart pattern. The underlying strength in crude oil may give the needed boost to this market to carry it out of the recent sideways consolidation and into new highs. This would establish a swing low at the current Channel Up support near $3.70 per gallon, with an upper target of $3.86 per gallon coming into play.
A failure at the support level will likely trigger a technical breakout to the downside, so traders will be watching this level closely as a pivot point for the next swing in Unleaded Gas, which will likely move in tandem with Crude Oil.
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