Prices rallied last week up to the declining trend line off of the late October high (Nov expiration) and the early Jan ’24 high, before running out of buyers. The Memorial Day weakness that has been recently discussed showed up after a strong close the previous week June opened a little higher and stretched the rally to $2.756. Following a little weakness the prompt traded a high volume reversal to the upside on Wednesday with the most contracts traded in a day since 02/21, and closed at $2.798, the highest daily close since 01/17. June’s close was its second highest this year (v $2.808 on 01/09). The pre – holiday price pressure showed up the next day. June traded into a band of resistance between a couple of mid – late January daily reversal highs (and the aforementioned trend line), where the soon to expire prompt printed what is the odds on favorite for the May high at $2.924 and reversed lower with even more volume. Follow through weakness on Friday left June $.404 off its high just a day earlier…and a high volume reversal on the weekly chart.
High volume weekly reversals have long been the gas market’s favorite method of communicating that it has traded to and failed at a significant, unsustainable (at least temporarily) high. Reversal or not, exceptionally high volume weeks are almost always noteworthy events in the natural gas market. For example, the last three times that more than three million contracts were traded were:
