Gasoline may drop below $2.70 a gallon after failing to break above the 200-day moving average last week, according to a technical analysis by T&K Futures & Options Inc.
Futures may slip to $2.6879 a gallon, the intraday low on May 1 when futures sank to the least since Dec. 18’s $2.659.
Gasoline settled below the 200-day average at $2.8885, a key technical resistance level, on May 10 after briefly trading above it the previous day for the first time in a month.
“The 200-day is the ultimate trend change where something goes from bullish to bearish long term,” Michael Smith, president of T&K in Port Saint Lucie, Florida, said in an interview yesterday. “Friday, you had a failed rally attempt above the 200-day, which is very strong resistance.”
To reverse the downtrend, gasoline would have to settle above the 200-day average for several consecutive days, Smith said. If it can’t, it would be poised to test the May 1 low.
The front-month contract has made a series of lower highs and lows, Smith said, since reaching $3.2672 on March 11. The latest high was on May 9, when it touched $2.8884.
The June gasoline contract fell 2.48 cents, or 0.9 percent, to settle at $2.8603 a gallon May 10 on the New York Mercantile Exchange.
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