Since the start of 2017 the U.S. Gasoline Fund (UGA) has been on a downward trend. From the chart shown below, you can see how the positive runs in April and May have been unable to break through the trend line starting from late December 2016. Last week the trend line was pierced (Green circle).
Before getting too excited. I would look for a follow through day, at minimum. The Relative Strength Index (RSI) has moved off the 50 line, which is a good sign. The average volume shouldn’t sway us either way. It has been quite average.
If we look at the price of oil, we see that the price since mid June has moved up from $42 to about $46.50. Does this move have legs? If yes, then this certainly helps the case for UGA moving higher.
We are in the middle of the northern hemisphere’s summer travel season. Based on AAA’s measurement, this 4th of July holiday 44.2 million people traveled in the U.S. This was 1.25 million more than the prior year (2.9% more). Demand plays a role here, as well.
Let’s see what this week holds in store for UGA.