June fell back to test April’s final day high $2.274) before rallying through the resistance that had limited prompt gas last week and before May’s decline in expiration. June’s recovery left it with the highest close since March 10th and notably over the continuation 10 – week SMA, for the first time since the week of the December high. The continuation chart shows a constructive “outside” week with a close above last week’s high. Despite the relative show of strength after May was off the board June failed just short of the high that it traded a week ago ($2.529 vs$2.543) and for a second week at resistance bracketing its February low ($2.468). June ended the week just about where it began ($2.410 vs $2.395) but did manage a third straight higher close…the first back to back to back higher weekly closes since the first three Fridays of last July. The zone of resistance between $2.468 – $2.543 and June’s 10 – week (currently $2.604 and declining) is likely to be a formidable barrier to extending the rally particularly given that volume fell again this week.
When trade remains within the range traded during a previous period (whether days, weeks, or months) important support and resistance has been defined (as it has over the last few weeks, the longer the period the more important those levels are. As mentioned previously, violation of either of the new extremes is usually a trigger for influential traders (speculative hedge funds) who have been and remain significantly net short the gas market. Trade through the April high (this week’s first close over the continuation 10 – week SMA as well as the 50 – day) since the week ending 12/16/22, suggests is the far more likely of the near term directional outcomes. This will likely extend the rally toward the March recovery high ($2.674, 03/14).