I think the charts are telling us that gas is going lower. I've started using the UGA ETF as a proxy for gasoline prices. As reported earlier, UGA broke its uptrending support line several days back. That was the first confirmation. Then it moved back up into the channel and then stalled before breaking down with a significant gap (AKA with gusto). Then it went back up to try to break into the channel again and all it found was sellers. So support has now turned into resistance. That's the second confirmation. Now we need to see some major technical indicator break down to get the herd moving south and the large head and shoulders below could be just the ticket.
The shape of this formation is not perfect. I'm not used to seeing owl ears on both shoulders like that. I'm also not used to seeing the inclining double bottom that occurred at the neckline. The volume isn't really saying much either (I checked independently of this chart. But if this red neckline breaks down and the VIX begins to climb at the same time then this ETF might not need much of a nudge in a southerly direction in order to get the herd moving.
I'll be watching that neckline closely in the coming days.
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