Thursday, July 30, 2009
The main issue on this chart is that prices are now below the upward sloping trendline that started earlier this year. Also note that prices are in a "lower highs" situation. Finally, prices and the EMAs are bunched together with no clear direction.
This is a great example of a pennant pattern. Notice how prices starting falling at the end of June followed by a counter-rally in July. But now prices have moved through the lower trend line and have moved through the EMAs.
Let's take a look at the fundamental picture.
Even though inventories have been decreasing, oil inventories are still above historical norms.
Gas demand has picked up leading to