Contrary to the writings this summer, October tested the August lows ($7.532 – $7.550) and broke below as support could not hold that area. For only the second time in the last ten years, the August lows broke down in September. When there was insufficient sponsorship for near term gas to hold the well – defined support, October plunged to a low of $6.737, as trading for the week concluded . To a lesser degree, it took the rest of the maturity curve and strips followed the declines. Neither of the two previous violations of the August lows (in ’20 prompt gas traded an “outside” month reversal to the upside and, in the other -’15- prompt gas was in a downtrend already 18+ months old), appear to present an acceptable similarities for the remainder of ’22.
Serious, resistance has been clearly defined by multiple calendar month highs from May through September, all between +/- $9.40 and $10.028, but where is support sufficient to overcome the momentum built to the downside since the failed late August breakout? Since prompt gas first closed over the continuation 40 – week SMA in August ’20, the rising moving average has been tested multiple times recently at the July – Q3 low. Only during December ’21 has it been violated on a weekly closing basis for more than a single week. Currently the value of that rising moving average is $6.489. For several weeks there has been the exceptional separation from intermediate/long – term trend defining 40 – week SMA (the high weekly level was 55% above that Average). While it sometimes takes longer than we think to materialize, prices should trend back toward the mean mean is as close as it gets to a technical certainty. Currently the separation is 5.2%. It should be noted that before the July low was traded the week ending separation reached 2.6%. During that week prompt August traded +/- $.23 below the moving average, before prompt gas turned and rallied to a higher high.