Have Gasoline Prices Bottomed? Watch This Chart Pattern

Over the past 18 months or so, investors have seen the energy market implode. Gasoline futures have correlated pretty well with Crude Oil in so much that they have both tanked.

Most investors want to know if the decline is over with. Have gasoline prices bottomed? Sure would be nice to have a crystal ball, but the reality is that it’s simply too early to tell.

BUT what we do have is a chart and a pretty good setup from a “price” perspective. This doesn’t mean that Gasoline prices bottomed – it just means that we have a good risk-reward pattern that gives us a clean setup to manage risk (i.e. set stops). Or if watching as an indicator, a reason to think energy could start to rally.

The chart below is a “monthly” look at Gasoline Futures prices. The decline into 2016 has taken gasoline prices back down to levels hit during the 2009 financial crisis (the last major bottom in gasoline prices). Gasoline closed at the $1 level in 2009. Of late Gasoline prices declined to test this level and have seen a small bounce since. This coincides with crude oil’s reversal as well.

Gasoline Futures – Monthly Chart

The bounce could be forming a bullish reversal pattern at the 2009 lows, where the candlestick leaves a long wick. This also comes as Gasoline tests two other support lines.

Crude Oil and Gasoline futures are both trying to create bullish monthly candlesticks (i.e. reversal patterns). We have no way of knowing if these patterns will hold, but it’s definitely a higher possibility than last month.

Due to the way that the energy market has pulled equities down, perhaps a rally in Crude Oil and Gasoline prices would be good for the S&P 500 as well (it’s also testing its 5-year rising support).

Lots of important price action early in 2016.  Stay tuned and thanks for reading.

Twitter:  @KimbleCharting

The author does not have a position in the mentioned security at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.