Price action continued in the recent month testing the commonly traded Moving Averages as well as adding to the support between +/- $5.15 and $5.20, the trend line rising from the September and October lows of December gas ($5.165 during the past week, $5.213 for the coming week). Following the successful test of the trend line and moving average support prompt December rallied to trade as high as $5.876 before fading to end the week almost exactly mid-way between the week’s low and high ($5.516 v $5.4955).
The wide weekly ranges that have resulted in higher lows and lower highs and the series of relatively “tight” weekly closes are consistent with the construction of a technical pennant which can construed as part of a continuation pattern– unless/until prompt gas trades through and closes below the last significant higher low. This week for the first time in nine weeks total open interest ,which had declined from 1,468,636 in mid – September to 1,267,227 this past Tuesday, increased. Declining volume and open interest is consistent with a period of price consolidation. Increases in both will be indicative of impending resolution of the consolidation. That will be the key to the upcoming resolution of the month long consolidation.