September plunged through the conventional support zone and closed below both on Tuesday with a significant increase in volume, oddly though the prompt recovered. The extension of the decline to close at $2.808, the lowest daily close since November 14th, below definable support with the highest volume since 07/23 had the earmarks of a decline that would be extended lower– Huh – volume, although still higher than average began to dry up, and the ranges traded during the two days following the new low close were less than a dime. The restricted ranges and the closes near the highs were clear suggestions that the enthusiasm of Tuesday’s sellers had, substantially diminished.
There is still a lot of negative seasonality ahead, including the period bracketing Labor Day that will be the primary focus of the next Week’s, but a weekly reversal (the close for the week was higher than the open after trading a lower low) with increased volume, to hold the trend line feels like a rejection of lower prices. The determining factor will be whether the trend line declining from the June and July highs (currently $2.980) continues to guide prompt gas lower or a will it be violated and trigger a short covering rally to test some of the plentiful resistance between $3.20 and $3.50.
