Bearish Flag Pattern Setup on Gasoline, Target at 2
Trend Analysis
The main view of this trade idea is on the 4-Hour Chart. Gasoline futures (RBOB) appears to be in a bearish flag pattern setup. The pole of the flag can be seen from the sharp decline from 2.55 highs to the initial low at 2.31. Then RBOB began to gingerly channel lower and is currently retesting the 2.31 support level. If RBOB breaks below that support, the futures contract is expected to decline towards 2. A negation of this move will be observed if RBOB breaks above the resistance trendline towards 2.35.
From a Daily perspective, RBOB is pulling back from the 2.55 highs. Next levels of support on the Daily Chart is seen around the 2.10 price level.
Technical Indicators
On the 4-Hour Chart the moving averages (MAs) are above the RBOB price. Also there have been negative crossovers on the short (50-MA), medium (100-MA) and long (200-MA) fractal moving averages. The RSI is below 50 with the KST recently having a negative crossover.
Recommendation
The recommendation will be to go short at market, with a stop loss at 2.35 and a target of 2. This produces a risk/reward ratio of 3.39.
Disclaimer
The views expressed are mine and do not represent the views of my employers and business partners. Persons acting on these recommendations are doing so at their own risk. These recommendations are not a solicitation to buy or to sell but are for purely discussion purposes.
The main view of this trade idea is on the 4-Hour Chart. Gasoline futures (RBOB) appears to be in a bearish flag pattern setup. The pole of the flag can be seen from the sharp decline from 2.55 highs to the initial low at 2.31. Then RBOB began to gingerly channel lower and is currently retesting the 2.31 support level. If RBOB breaks below that support, the futures contract is expected to decline towards 2. A negation of this move will be observed if RBOB breaks above the resistance trendline towards 2.35.
From a Daily perspective, RBOB is pulling back from the 2.55 highs. Next levels of support on the Daily Chart is seen around the 2.10 price level.
Technical Indicators
On the 4-Hour Chart the moving averages (MAs) are above the RBOB price. Also there have been negative crossovers on the short (50-MA), medium (100-MA) and long (200-MA) fractal moving averages. The RSI is below 50 with the KST recently having a negative crossover.
Recommendation
The recommendation will be to go short at market, with a stop loss at 2.35 and a target of 2. This produces a risk/reward ratio of 3.39.
Disclaimer
The views expressed are mine and do not represent the views of my employers and business partners. Persons acting on these recommendations are doing so at their own risk. These recommendations are not a solicitation to buy or to sell but are for purely discussion purposes.
Trade closed: target reached:
Target Met. Move stop to breakeven and monitor for change in trend.