- New Science in old markets -

Energy markets are at the top of their price range

There was a top extension in the Rbob gasoline contract last night:

Rbob top,ext

This chart illustrates nicely how these signals work. The whole up-move from early September started with the upward break from a compression and the reaction from late September was marked by a top extension just as it started. Now we have another top extension and the market will find it hard to rise further for a while.

This is a chance to adopt some shorts in this and other related energy contracts, such as crude and heating oil. Energy markets are broadly range-bound at the moment and prices are now at or near the high-end of that range. There is room to fall back (eventually and erratically) back to the bottom end, which is about $10 per barrel lower in the case of crude oil, 40c per gallon lower in both Heating oil and Rbob.

All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com