The new prompt opened higher and immediately rallied to test resistance which was contrary to my expectations coming into the week. From the post – Memorial Day low at $3.098 prompt gas has traded 23.2% higher…exceeding the five, ten and twenty years averages for early June rallies by a couple of percentage points. The anniversary of last year’s June high is on the 11th. It would not be surprising if July stretches the rally a bit during the coming week but as detailed when then prompt June was testing the same zone last month, resistance to a significant extension of the rally is strong. The calendar May high was $3.840. In six of the last ten years (a mixed bag) prompt July has traded through the May high but has done so in each of the last four years. In two of those four July’s it traded the June high of the 8th and on the 11th (’22 & ’24). In the other two the prompt corrected from highs on the 15th and 20th before rallying into expiration. July has not traded through the May high, yet, but if it does and closes there, and above of its 50 – day SMA expect a test of resistance between $4.075 and $4.120.
On a continuation basis, since the high volume daily reversal on 04/09, prompt gas has constructed a trading range just about one dollar wide (between $2.86 – $2.87 (the low daily close has been $2.930) and $3.83 – $3.840 (the high daily close was $3.816 on that 04/09 reversal day). The upper boundary of that range roughly corresponds with the lower boundary of a range constructed between mid – February and early April. The low daily close during that period was $3.834. In the event of a “breakout” by prompt July through the resistance described earlier, the lower boundary of the previous more elevated range will provide substantial resistance. Because of the historical consistency of a mid – June high there is no suggestion for chasing a potential breakout higher.
