Discussed in the Daily last week that the speculative short interest (still over 22% of open interest -per the report dated last week) had become problematic and could be the source for some of the buying that occurred last week. With sellers sufficient to drive price lower earlier in the week, then surged higher. It is clear that the lack of total open interest will create volatile movements. While that rally is likely just an oversold reaction, both the daily RSI and the Bollinger study extreme zones, the high volume (on a relative basis) violation of the declining trend line suggests (at the least) a near – term low. More important is that prompt gas undercut the June low and round low on sellers while the 40 – week SMA has now been successfully tested twice.
That said, the gas market traded a rare “outside” month during calendar June (the last one of those was during September ’20) which inflicted a lot of technical issues to the charts. Time will be required to repair the issues and there are a lot of trapped late coming bulls between +/- $5.50 and $9.50. Many of them will be elated to exit those positions anywhere near breakeven. Expect rallies to find some sellers at the beginning of this potential rebound.