Consolidating For a Run or Break Lower

Weekly Continuation

After a “somewhat” calm wee of trade the question that was mentioned in the Daily –Is gas constructing a base to resume the secular uptrend higher or is it consolidating after a substantial decline during the nine weeks between the August high and the October low, thereby allowing the extremely oversold conditions to moderate, before another β€œleg” lower. Both directional bias’ seem to have significant contingencies which means that violent whip saw action may occur.

For the market to advance after building this base, a violation of the intermediate downtrend line will suggest that the decline from the August high ($10.028 – $4.750, 52.6%) has likely concluded, but not necessarily that a serious rally will follow. Higher levels of resistance, not limited to the the November reversal high and the still rising 40 – week SMA, are formidable areas. Three of four higher weekly closes suggest that December is gaining the sponsorship for a successful test of the declining resistance. Violation of the trend line and a weekly close above $6.459 will suggest that prompt gas has traded the first higher close of a new intermediate term uptrend (as discussed in the Daily).

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