I have been dancing around the potential of a bias change occurring the gas market for a couple of weeks with the series of higher lows over the last two months, volume increasing on the positive trade days, increase in open interest in rallies and the breakout of the resistance zones that have held the market rallies for three months. Some of those elements came to fruition last week with break out above resistance in the high $2.40’s and the ensuing run up to the highs from earlier in Q2 on the continuation charts. Some of the buying was clearly short covering as the resistance areas were penetrated.
With the well defined support zone at $2.00 and below the last three months have provide a consolidation base for the current run. Now the question will be how far does the rally run prior to expiration. May high of $2.685 up to the highs for the July contract at $2.707 to $2.816 will likely provide to much selling for prices to extend much beyond.