Gasoline is painting itself into a corner. A quickly approaching point will cause the price to break out of this triangle. A wedge like this predicts a dramatic change. It is unlikely to hold the current price. And when it breaks out it will either go up or down. Given the scale of the chart (rather long term) it could move quite far.
This looks like a bearish rising wedge, meaning the price should break downwards, and send retail gas down well below $3.00, maybe to $2.50. That would no doubt give much needed relief to recession-strapped Americans, truckers, taxi drivers, and the whole American economy in general. But this wedge can also break upwards. Gasoline could spike to $5.00. This would be the devastating blow that crushes all hope of any quick recovery from the current recession. Even mainstream economists would start uttering the anathematic word hyper-inflation.
2 comments:
I'm glad to see that you recognize the importance of the weekly gasoline chart. My interpretation of that chart is that prices have formed a huge head and shoulders bottom and are about to explode through the neckline.
Neckline across the tops
left shoulder in early 2006 @ $1.50
head in early 2007 @ $1.40
right shoulder in fall 2007 @ $1.90
I am not sure why Americans have not figured out how to change the culture of being one with their vehicles and to shun public transportation and general selflessness. Only when we make this adjustment, will our economy truly recover.
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