Author: Willis Bennett

Redefine or Just Test Support Levels

Weekly Continuation

March gas gapped lower at the beginning of last week, then tried to close the gap and failed, creating a resistance target of $4.468 – $4.487 for the contract to challenge before or during expiration (likely in its final days as prompt). Traders should wait for March to redefine near term support during the coming week as last week’s prices suggests it either has done or is in the process of doing.

Since peaking at 1,182,657 open interest in total contracts outstanding (up from 1,104,958 at the beginning of the year) coincident with March trading to $5.572 (the biggest one – day spike in volume in nearly a year (02/16/21). That total open interest has now declined more than 94,000 contracts in seven trading days to less than the total at the December 30th low.

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Sunday Trade Shows Strength

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Went into some of the technical analysis from last week’s decline extension in the Weekly Section and am confused as to why prices are higher in early trade on Sunday night. Perhaps it is the same light trade game that has occurred of late on Sunday night. Be careful not to chase to far for there is likely more downside to occur before establishing new length.

Major Support:$4.057-$3.972, $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $4.46-$4.48,

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Action Continues Lower as Volume Declines

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Guess we’re going to throw the Mar contract under the buss but the up-coming summer strip is not showing the weakness that the prompt contract is. What’s that all about– perhaps folks know that the winter is going to end with the storage well below the 5-year Avg, additionally with the lack of significant new drilling (production) coupled with the LNG demands continuing — perhaps the upcoming summer will provide the potential for stronger prices. There I go again diving into fundamentals– I would look for prices to consolidate in this area ($4.00) before a new directional bias develops.

Major Support:$4.057-$3.972, $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $4.46-$4.48,

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Extension Lower

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Action declined during the trade yesterday, taking the price down to intermediate support from the 40 wk SMA of March gas ( hard to believe) or just the fact prices went to $4.00. Still think that the market is seeking for near term support levels and perhaps the storage report will provide an indication of a floor. Let the market provide the indications of potential momentum directions — even on the range trade.

Major Support:$4.057-$3.972, $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $4.46-$4.48,

Bounce As Predicted

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Was startled that the gap was never really challenged yesterday when prices proceeded to bounce higher in the early morning trade. Still expect a challenge to the gap area but the action seems to want to push prices lower. Prices are in the middle of the recent range so sometimes its better to sit on the sidelines and let the momentum develop and define itself.

Major Support: $4.20-$4.186, $4.057-$3.972, $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $4.46-$4.48, $4.82

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Perhaps a Small Bounce and Consolidation

Daily Consolidation

Prices action continue to behave well for additional declines but not sure today will be down that much — look for a small decline or perhaps a little bounce. The gap from yesterday should be thought of as the near term high end of the range.

Major Support: $4.20-$4.186, $4.057-$3.972, $3.734, $3.63, $3.584-$3.522
Minor Support:
Major Resistance: $4.46-$4.48, $4.82, $5.5

Correction Seems to Continue with Gap Opening

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Prices opened down $.20 in the Sunday night trade, creating a gap in the Daily and Weekly charts between $4.487- $4.384. My assumption is the forecasts changed (warmer) and Sunday night’s action is more about liquidation (volume high in initial 5 minutes) than an alteration in the bias. Go into expectations for the March contract in the Weekly section – but let me summarize that the declines (now and may be coming) do not alter the general bias that remains in the market. I mentioned last week about the expected trade in early March (as prompt) contract and those expectations have come true — now it is time to trade with a range trade bias.

Major Support: $4.20-$4.186, $4.057-$3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.52, $4.38
Major Resistance: $4.82, $5.572, $5.81-$6.13

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March Runs to A High

Weekly Continuation

The run identified and discussed (on this website) continued early last week and continued the trend of setting a high, for the March contract, early in it’s prompt tenure. Taking prices up over $5.57, the market ran out of short covering and remaining winter bullishness to melt down a $1.00 in two days. I wrote in the daily last week that this year’s pattern was strikingly similar to 2014 and warned any bulls to tread softly. Now I will mention to the bears that this is unlikely a direct collapse to $4.00 as there are several areas of support between last week’s close and $4.00.

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Timely Daily

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The day I decide to remember history — is the day prices correct over $.60 downward– all I can say is I wish I had that kind of influence on the Craps table. Seriously, prices corrected yesterday but tonight they are trying to rally again– not sure what the strength is leaning with — fundamentals are bullish and have been for the next two week period which begs the question of why the sell off? May be in for additional volatility until the market realizes that the ending winter inventories are likely to be at a 200+ Bcf deficit to the 5year average (March being average demand). There I go again into the fundamental world — so please disregard the last comment.

Major Support: $4.19-$4.186, $3.734, $3.63, $3.584-$3.522
Minor Support:$4.81, $4.73, $4.52, $4.38
Major Resistance: $5.81-$6.13, $6.181

Seen This Before

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Not sure how many of you were traders in 2014 but the similarities to the trade in Jan/Feb of 2014 and this year are beginning to show a striking similarity. Fundamental in late Dec ’13 and Jan ’14 were weak and then the market got on the coattails of late winter showing up in Feb ’14. Shorts (I was one early in the process) got pummeled, fortunately I flipped the bias for the last week and made up some of my losses. Then the market got stupid (nat gas has a history) and started to correct which worked out just dandy. In late Jan ’14 – early Feb ’14 prices went from $4.20 – $5.72 at the end of the month. Then proceeded to rocket to the highs of $6.493 in the middle of Feb. Oops — then corrected back to $4.44 as the March contract expired. Have no idea how high this silliness will go — perhaps to the highs of last week– but it will correct and will is a very short period of time. Be careful if your buying into the weather hype– remember last October when Europe was going to run out of gas and prices fell over $1.00 in a day off the highs, then proceed to loose another dollar over the next 8 trade days.

Major Support: $4.19-$4.186, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.73, $4.52, $4.38
Major Resistance: $5.81-$6.13, $6.181

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