Last week prompt June fell to a new contract low as it tested continuation weekly closing support between $2.035 (week ending 04/07) and $2.106 (04/14), but volume fell again, to +/- 1,600,000, close to the same as the week of the April low, indicating that the firepower to drive the prompt back through $2 was also lacking. Opening at $2.148 June traded down to $2.140, the old support level from the week ending 04/21. That early print turned out to be the low of the week, but June tried again on Friday…trading as low as$2.147, before reversing higher accompanied by the highest volume since 04/17 when the prompt traded a nearly identical range ($2.146 – $2.314 v $2.147 –$2.335). Friday’s high volume “outside” day was a positive technical event but is more symptomatic of the final throes of the construction of a low than it is predictive of a significant extension of the rally. Substantial conventional, trend line and moving average resistance.
The consistent range that has held the market for over two months, suggests that the market is trading a “base”, that will ultimately support a significant rally, while the premium that has been awarded to deferred months is steadily compressed, suggesting in the market that its indicative that “natural gas will never rally again”. This sentiment that pervades the gas market will likely be the fuel source for the upcoming rally.