U.S. gasoline prices have fallen more than 20% since their Iran-war peak in April, with the latest declines encouraged by the announcement of a deal to end hostilities, and they could slide further if a pattern forming on the charts comes to fruition.
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The price action in U.S. gasoline futures since the start of the war has carved out what technical analysts call a head-and-shoulders pattern — one of the most widely recognized signals that a market may be reversing course. Think of it as a silhouette: two smaller peaks, the shoulders, flanking a taller central peak, the head. When prices fall below the base connecting the two shoulders, known as the neckline, it typically signals more losses ahead.
In this case, the left shoulder formed around March 23 near $3.40, the head peaked on April 30 at about $3.82, and the right shoulder has been taking shape in the $3.20–$3.25 area. The neckline sits near $2.90. If the pattern plays out fully, the measured move lower would be around $0.90, potentially dragging prices down to the $2.00–$2.10 range, where they traded before the war began.
A momentum indicator called the Relative Strength Index, or RSI, is also pointing lower, though it is approaching oversold territory, meaning the right shoulder may need more time to develop. Notably, RSI also failed to confirm the April peak — a divergence traders read as a warning that the rally was losing steam.
As with many markets, gasoline prices have been sensitive to Iran-war developments and may continue to be so until the deal is fully sealed and subsequent negotiations take place. To signal a return to higher prices, gasoline would need to climb back above $3.40.
What the chart shows:
(Daily markets commentary from Reuters analysts on the signals financial charts are sending - and what they might mean.)
