RBOB gasoline futures (/RB) showed recent support stability at 2.45 (yellow line). As it bounced along that support line, it drew closer and closer to downtrend resistance (purple line). On Tuesday, it broke above downtrend resistance and has now closed above it for two consecutive sessions providing a fairly strong confirmation that downtrend resistance is now support.
We are looking for a retracement to downtrend resistance turned support, at which point we will buy a few contracts due to the attractive reward to risk scenario that will present. In the event this occurs and it goes in our direction after entry, we will keep a fairly close eye on the 200 day simple moving average…a level at which selling interest was met on 9/16/11 and 10/17/11 making it relevant.