The prompt opened at $2.605, creating a daily continuation gap above Friday’s high of $2.561 Despite February quickly filling the gap the indication that it had brought was validated by a reversal and follow through that left the prompt above January settlement and the first trading day of January high. Extension of the rally to test, and close above the continuation 50 – day (for the first time since 11/16), plus a weekly close above the 10, 20, and 40 – weeks SMAs AND the December high leaves $2.524 the odds on favorite for the January low.
While all of that bullish technical data points is important –it is not intended to suggest that prompt gas has kicked off on one of its periodic winter rocket rides, nor that the perennially amply offered February contract won’t back and fill from this first week of ‘24’s strong close. There is an abundance of well – defined resistance including but not limited to 50% retracement of the decline from the October – Q4 high and the violated trend line drawn from the April – May – June lows, between $2.906, the late Friday high of the holiday abbreviated week, and $3. It does suggest a change in the way traders are approaching the gas market from actively selling rallies to buying during bouts of weakness to test progressively higher levels of support. Since the 12/13 trade and reversal from $2.235 prompt gas has traded higher lows (defined as a higher low followed by a higher high) of $2.385 (12/19) and $2.412 (12/28) and now $2.524 (01/02) can be added to that list.
