September RBOB has appreciated 13% in the last three weeks lifting prices to fresh intra-day highs in Friday's session trading above the February highs. I see this move in the 9th inning and expect a retracement in the immediate future. This goes hand in hand with my prediction of a trade lower in WTI in the coming weeks.
In February after peaking out just above $3.06/gallon futures traded lower 9 consecutive session retracing 50% dropping just better than 20 cents within that time frame. Past performance is not indicative of future results.
Click to enlarge.
I'm operating under the influence that prices are very close to establishing an interim top. I suggest using the Fibonacci levels (white jagged lines) as trading objectives as we start depreciating in the coming weeks. A settlement below the 8 day MA (orange line) which is a dime off current trade would be the first confirmation that lower trade is likely.
I am not looking for a collapse and expect prices to be range bound for several months moving forward. The approach is to attempt bearish trade at the upper end of the range and bullish trade near the lower end of the range. As seen on the chart below the EIA does not look for any significant appreciation of deprecation in RBOB either as their projections do not have prices wandering too far from current levels.
By. Matthew Bradbard
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I have over 1 decade of experience in the Commodities industry. Managing my own IB for over 5 years and my own CTA for fifteen… More
