Gasoline needs to rebound above $3.1425 a gallon to reverse a downtrend, according to a technical analysis by T&K Futures & Options Inc.
The May contract has made a series of lower highs and lows since reaching $3.3037 a gallon Feb. 19, with the latest high on April 1. Since April 1, futures have tumbled as much as 9.3 percent to test support at the 200-day moving average. Prices settled above the average, which was at $2.8831 yesterday, after closing below that level April 5.
“The 200-day level is the last stand,” Michael Smith, president of T&K in Port Saint Lucie, Florida, said in an interview yesterday. “It doesn’t mean much unless it rallies back to where the whole fall began. You have to break above and close above the April 1 high.”
If gasoline settles back below the 200-day average, it will go all the way down and test support at the Dec. 7 intraday low of $2.7578, Smith said.
The May gasoline contract rose 4.57 cents, or 1.6 percent, to settle at $2.9093 a gallon yesterday on the New York Mercantile Exchange, the first increase in seven days.
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