The February tried to rally but failed at declining resistance, reversed from that lower high, again, and faded into expiration. Settlement at $2.490 was $.131 less than January and $.247 less than the average monthly settlement during ’23. New prompt March, which was offered at a $.443 discount when Feb went off the board was left to set the important January low at $2.037 on the last trading day of the month. The “expiration” gap accounted for the first ever “outside” January (prompt gas traded through both the calendar December high and low). It does not get a lot more technically bearish than an “outside” month with a close below the previous month’s low with increasing volume. 9,899,538 contracts changed hands during December, 12,006,048 during January. It is interesting that the last time that much volume traded during a calendar month was February and March of ’20, when both month’s volumes were slightly higher as prompt gas began to construct a multi – year low. Despite trading within a narrow range (an average of $.102/day vs a 15 day ATR of $.264) March managed to trade two “outside” days. Back to back “outside” reversal days are rare and suggest market uncertainty. The new prompt ended the week by recovering from the lowest low traded since April 14th ($2.021).
March, is sitting right on top of serious conventional support…four consecutive monthly lows from February through May ’23 ($1.967, $1.944, $1.946 and $2.031). Unless March can get through all that support in a hurry it has the serious chance of drawing out speculators to challenge the resistance levels due to the markets inability to break lower. This may trigger another round of short – covering.
