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Chart Advisor: Gasoline Reaching 12 Year Highs

Chart Advisor: Gasoline Reaching 12 Year Highs

Posted October 20, 2023 at 7:40 am

By Manuel Tellechea, CMT

1/ Sweet Breakout

2/ Gold Points Higher

3/ Looking for Risk

4/ Biotechs Fall

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1/ Sweet Breakout

Gasoline futures not only reached new 52-week highs today but also reached levels not seen since 2011. This marks their 7th attempt to cross above the 26-point threshold, which has acted as a resistance level for slightly over a decade.

Currently, it remains above this zone and, if the trend initiated after Covid pandemic continues, we might witness the price revisit the highs of 2011.

2/ Gold Points Higher

The precious metal is having another positive week and has finally broken out of its technical structure. Unless there are significant changes tomorrow, Friday, gold will be concluding its second week with gains exceeding 2%. 

Looking at the chart, it’s evident that the critical level to surpass is around 195. Around this level, we’ve witnessed three unsuccessful attempts to push the price to higher levels. Will gold finally manage to break the multi-year support base that the price has been forming for slightly over three years?

3/ Looking for Risk

The ratio comparing the yields of high-yield corporate bonds to investment-grade corporate bonds, which serves as a proxy for measuring risk appetite, is reaching new highs. As interest rates rise, investors are still searching for fixed-income investment opportunities.

Thus far, defensive postures are not in sight; rather, the ratio, which has been increasing since the second quarter of the year, has retraced to the highs of 2022, gathering strength for its journey into uncharted territory.

4/ Biotechs Fall

The biotechnology industry is not experiencing its best phase, and this trend has persisted since 2018. The index monitoring this industry within the S&P 500 appears to be undergoing a distribution phase, with a decline that began in early 2021.

With just one day remaining in the week, the index is reporting losses of nearly 4% and has hit 52-week lows today. A potential Head-Shoulders technical pattern is taking shape. I use the term ‘possible’ because confirmation will only occur if the price crosses below the neckline, situated between 5000 and 4900.

Originally posted 20th October 2023

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