Expiration and Unknowns

Weekly Continuous

Last week prices trade through the resistance that limited the upper boundary of the recent short term trade and closed above it. While this type of event usually has supportive technical implications, the market internals (volume and open interest) did not, but it should be noted that the daily outside reversal on Thursday did occur on above average volume. This is all very short term interpretations and doe not alter the medium and longer term analysis that this web site has provided over the last few week. It is not uncommon for prompt gas to return to test the validity of “new” support (or resistance) once violated becomes support. Perhaps we will witness that type of action this week as the market heads into expiration.

Several positive technical aspects occurred in last week’s trade–prompt gas closed above the upper boundary of the recent range that has held action with the highest weekly continuation close since late Feb (2.854) and above the 10 Week SMA for the first time since that same week. Unfortunately, the second straight weekly gain came with decreased volume (this week average daily volume fell by an roughly 15,000 contracts while total open interest fell for the third straight week.  Look at the chart below:

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