Price Action Still Negative — But a More Bullish Bias

Weekly Continuous

Been fishing in Northern Ontario for 10 days and noticed that the market had found the drive to close above resistance in my absence. The October contract traded into and faded from resistance clearly defined by its April – May – June lows and on a continuation basis by the June low. Prompt gas has closed higher for four straight weeks since trading the August low, but volume has declined in the last three of those weeks. A general precept of technical analysis is that higher volume is needed to drive the bid into/overcome well – defined resistance. The time when the most technical information is released is when price tests defined resistance or support…the message this week was that there was insufficient sponsorship to sustain October gas above $3. At the beginning of August the lack of volume which fell for straight weeks into the low.. The message then was that there just were not enough sellers willing to the offer the prompt to and through $2.600. While it may well be a function of the price negative seasonal influence historically bracketing Labor Day but this week, there clearly were not enough buyers to drive the bid further into/through the resistance. IF more buyers do not show up when trading resumes (despite the higher close and the closes above daily and weekly moving averages) October is likely to retrace a fraction of recent gains and remain range-bound as similar months have behaved.

That said, on a continuation basis since the August low prompt gas and the October contract have traded a series of higher lows and higher highs…which gas has not done since the beginning (and through) the rally from the April low to the June Q2 high. Absent a post Labor Day collapse (that historical seasonal thing) do not expect a retest of the August low.