For the third consecutive week steadily lower offers for the prompt gas ended with a reversal to the upside creating a higher low each time. Until late last week resistance presented by the upper boundary of a trading range that included the late July and calendar August highs had limited the reversal rallies. On 09/12 a high volume extension left October above that resistance but there was little follow through after the weekly closing violation and the prompt faded to test the continuation 50 – day SMA. The reversal from a successful test of the moving average support left the soon to expire prompt above the almost always important 20 – week SMA for the first time since the close of week ending 07/12, at the highest daily close since July 2nd, the highest weekly close since 06/28.
The technical case has been made that the successful test of the August expiration low coincident with September expiration (both $1.856 for a rare perfect double bottom), was likely the confirmation of a traditional Q3 low. Even so, the declines for the last eight expiring contract months gives me pause for thought. While I am still not convinced that October will hold onto its gains, two weekly closes over increasingly well – defined support…between the continuation 50 – day (currently +/-$2.23) and the late July – August – early September highs (between $2.270 and $2.301), along with the buying that continued through Friday’s close, which was essentially on the high.
