The new week began with a gap lower through that ascending support (the original gap was $5.400 – $5.299 but was quickly narrowed to $5.400 – $5.370) followed by extension of the decline to a test of the continuation 50 day SMA (the first test of this commonly followed technical indicator since the August low(prompt gas has not closed under the 50 day SMA since April 21st). After trading to a new low for its tenure as prompt, the now soon to expire prompt recovered most of the week’s loss (including narrowing the week opening gap to 5.400 – 5.379 before fading to close $.13 lower. That established lower closes for the last two weeks for the first time since weeks ending 08/13 and 20 and the second time since 03/12 and 19, have substantially moderated the extreme short term overbought condition.
A week ago the technical indicators had returned to neutral for the first time since early summer with the violation of resistance presented by the October ’20 and February ’21 highs. This week’s trade weakened further but remains neutral as prompt gas appears to have recovered from quantifiable support including having traded a higher low. The last seven expiring monthly contracts have been well – bid into settlement (with three of the last four) trading the highs of their tenures as prompt on their last trading day (August traded its high two days before). Expect prompt gas to construct a series of lower highs and high lows during the coming weeks. Then an extension of the rally during late Q4 and/or Q1 is likely to occur. The last significant higher low was the September low at 4.735, this week’s trade to and recovery from a low of 4.825 is a successful test of support and creates that higher low. Together with last week’s lower high (5.964 v 6.466) prompt gas appears to have begun the construction of a “coil”. Unless or until important technical support (the September and to date October lows $4.735 –$4.825) is breached continue to expect higher prices.