The October contract spent ten trading days (from 08/25 until 09/08) running upstream against the seasonal current of price negative including multiple tests of the continuation 50 – day SMA. as discussed in the Daily last week, the prompt managed one daily close above the closely watched declining moving average, the highest daily close for a prompt contract since 07/22. The violation of the declining resistance was not confirmed by higher trade or volume (also discussed) and did not induce the expected short covering extension of the rally from the August low. Then the prompt provided a significant fade into this week’s close.
The failure of October ’25 to generate the sponsorship to extend the rally was different that the pattern of October ’24, when prompt gas closed above the 50 – day and rallied to record the high of its tenure as prompt on the day it went to settlement. The reversal from a higher high with a significant increase in volume, my rough calculation of average daily volume increased more than 75,000 contracts, along with increasing open interest as the prompt fell should be considered a technical negative. The October contract closed back within the range traded during the reversal from the August low (week ending 08/29). The range that week was $2.622 – $3.023 with 2,201,283 contracts traded. This week’s estimated volume was 2,577,0000. This is a strong suggestion that support deeper within that prior week’s range will be tested.
