Wholesale gas prices are on the move, appreciating just better than12% in the last three weeks. So do not be shocked to see prices in the coming weeks start climbing at the pump if prices remain at these inflated levels.
As seen on the chart above, prices have completed a 38.2% Fibonacci retracement and they have closed over a down sloping trend line that had capped upside since mid-March. As long as prices remain above that trend line, currently about 10-12 cents below current pricing, I remain friendly.
Prices on this daily chart appear to be overbought but looking at the weekly chart tells a different tale. RBOB has advanced for the last three weeks and this could be the beginning of a bigger appreciation to come. My suggestion would be to use the Fib levels as upside targets. Trade suggestions in RBOB include bull call spreads or gaining long exposure in futures while simultaneously selling out of the money calls 1:1. Again I would be bullish as long as the trend line near $2.65 in this contract held.
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