Author: Willis Bennett

A Close Above $5.00

Daily Contnuous

For the first time (after two attempts) since early Feb, the market closed above $5.00. The previous two strikes above that magic number were repelled during the daily trade. Now the market will have to confirm the move on even though yesterday’s run had stronger volume. It may be likely that the break above was met with some short covering so waiting a day or two for confirmation of additional gains may be prudent.

Major Support:$4.40-$4.26, $4.187, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $5.08, $5.04, $4.88, $4.60-$4.557
Major Resistance: $5.18

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Early Declines Find Buying

Daily Continuous

The early morning declines that took prices down to $4.747 before the buyers stepped in and moved prices back above $4.90. All of this happened on very light volume as the gains do not seem to be wide spread support for a launching for higher runs. With lack of volume traders need to be cautious in adding or starting to build positions. Fully expect prices to rise above the key $5.00 during the summer as some of the fundamental data comes evident, but the market action does not convince me that now is the time.

Major Support:$4.40-$4.26, $4.187, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.88, $4.60-$4.557
Major Resistance: $5.04, $5.08, $5.18

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Rejection At $5.00 — So Far

Daily Continuation

Price volatility settled back a little last week as the price range stayed within the previous week’s range. While challenging the $5.00 level, the move was rejected on Friday with the retreat to a higher weekly close. Would expect some correction before the market heads into the 13 month trend of higher expiration rallies. In the Weekly section of the web site I discuss the limitations of further declines in the coming couple of months.

Major Support:$4.40-$4.26, $4.187, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.88, $4.60-$4.557
Major Resistance: $5.04, $5.08, $5.18

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Inside Week

Weekly Continuous

Following the tests of support on Monday and Tuesday April rallied to test the resistance beginning at $5 before fading into the weekly close. Despite reasonably serious challenges to both, neither the high nor the low of last week was violated. Accordingly, April traded an “inside” week, but with the close in the upper quadrant of this week’s range suggests that the resistance presented by multiple weekly highs will continue to be tested.

In addition to last week’s modest tightening of the range traded, the ongoing consolidation by prompt gas has been accompanied by a reduction in the average daily volume. Open interested increased, slightly, this week but remains below the December low. Volume, an estimated 1,250,000 contracts this week, was the lowest in nearly a year dating back to the week ending 04/02/21 (including weeks with only four trading days).

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Is It a Higher Weekly High

Daily Continuation

Prices continued there gains and the volume each day this week has been a little stronger than the previous day but the total for the week is lagging from the previous week. Will the price action find the additional footing to set a higher high compared to last week– not sure. When I hear from the fundamental folks these prices are a combination of the conflict and the change in demand in the forecasts– I am more confused as ever for additional gains to set a higher high — perhaps it comes in the middle of the night (similar to last week) in very light trade.

Major Support:$4.40-$4.26, $4.187, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.88, $4.60-$4.557
Major Resistance: $5.04, $5.08, $5.18

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Bounce to High End of Mini-Range

Daily Continuous

So far this week prices have stayed within the range of last week neither breaking below the lows nor above the highs of the previous week. That can be defined as a consolidation trade range waiting for the next piece of information to perhaps break down or out.

Major Support:$4.40-$4.26, $4.187, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.60-$4.557
Major Resistance: $4.82-$4.88, $5.08

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Near Term Support Tested

Daily Continuous

The declines challenge the lows of last week only to find buyers (as expected) that took prices back up regardless of the fundamentals for natural gas and the weakness in the oil market yesterday. There is definitely support for prices between $4.40-$4.50, which is clearly supportive to prices near term, but my issue is with the potential fall out from a breakdown below $4.36. That could provide enough momentum to take prices well into the $4.20’s. Perhaps it doesn’t happen but with gas you never know.

Major Support:$4.40-$4.26, $4.187, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.60-$4.557
Major Resistance: $4.82-$4.88, $5.08

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Prices Work Recent Mini-Range

Daily Continuation

Falling apart in the early light trade on Sunday and Monday, prices found a bid when the traders arrived and took prices higher. Then in the late trade prices broke down — this seems like a confused market that does not fully quantify the fundamental data point. From a trade perspective buy the near term dips and sell the rallies to the resistance areas.

Major Support:$4.40-$4.26, $4.187, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.60-$4.557
Major Resistance: $4.82-$4.88, $5.08

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Price Action Showing Base Building

Weekly Continuation

For last week April lost $.291 and the summer strip lost $.247, while volume and open interest both declined. It is constructive technically when price, volume and open interest move in the same direction (see below).

Weekly Continuation with Volume and Open Interest

Total open interest declined another 12,562 contracts through 03/10 (open interest statistics lag one day) to just about exactly the same level as the week ending 02/11 which was the week that March gas traded its low before the big rally into expiration.

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Change of Pace

Daily Continuation

A little stunned looking at the Sunday market and it is down over a nickel. It seem lately, that the market is rocking north before correcting when the traders return to the office on Monday. As discussed in the Weekly section, still thinking that the market needs a more serious test of intermediate support provided by the last 4 week’s lows. Also bring up some historical perspective about trade during calendar March so be advised, I did not write it to solve any boredom during the basketball league championships.

Major Support:$4.40-$4.26, $4.187, $3.972, $3.734, $3.63, $3.584-$3.522
Minor Support: $4.60-$4.557
Major Resistance: $4.82-$4.88, $5.08

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