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 “leg” 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).
