Author: Willis Bennett

Quiet Start to the Week

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Not much to report on yesterday’s action with prices staying close to the opening after a brief run to $2.985. This is an interesting trade as the weather forecasts are showing frigid cold coming (so I have heard) and extending longer in time than folks thought, yet prices are relatively calm. This frigid February may take the storage surplus (over the 5 year average) out to the wood shed. Again, I have no idea how you fundamental folks trade, but I have to believe that prices have not baked in the results of the upcoming period of weather.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support:$2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.92-$2.997, $2.98-$3.05,
Minor Resistance:

Consolidation and Continuation of Recent Trend

Weekly Continuation

Three Friday’s ago, prompt February traded down to new lows for January.  That weakness brought an expectation of lower prices when trading resumed.  Rather than follow through to the downside prompt gas opened and left a small gap higher.  February hardly looked back before settlement .314 higher than that weak previous week’s close.  Last Friday, new prompt March didn’t give up all the expiration week gains but traded a daily reversal lower (that was discussed), dropping .146 from the day’s high and ended the week only a penny off the low.  The declines last week, with the selling, brought a similar expectation, March would be offered lower when trading reopened.  Instead, the first trading day of February began with another small gap higher (2.710 – 2.712). 

Needless to say, after last week’s weak close, expect prices to open higher on Monday, the question remains if the market has the support to close above the key resistance area around $3.00. Twice, last week, prices rallied above $3.00 only to find significant selling and resistance that sent prices down below $2.90 and into support zones. Will a third time be the charm?

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Monday Trade Trend Continues

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Been the trend recently (see Weekly section) for prices to reverse off of the previous Friday action. Sure enough, early prices are up Sunday night, from Friday’s close. The market has not shown the ability to close above the recent break out highs, retracing back below during the trade day. Tells this trader that the recent range continues and will continue to play it.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support:$2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.92-$2.997, $2.98-$3.05,
Minor Resistance:

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This May Be a Confirmation

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The rally off of a benign storage report took prices back up, nearing the resistance that rejected gains on Tuesday. This looks like a retracement and through consolidation, setting a higher low (near term) which may propel the gains for another test of resistance (likely) at $3.00. What happens there may well tell us of the near term range for prices — whether higher or lower.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support:$2.806, $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.92-$2.997, $2.98-$3.05,
Minor Resistance:

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Digesting Recent Gains

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Prices did little to imply a directional bias yesterday and seemed to consolidate the big gains on Monday and early Tuesday. Now it sits just above last weeks highs before they melted down after expiration of the February contract. No solid break out has been confirmed yet but a weekly close above the resistance above the old gap in the March chart (closed yesterday) will have an impact. Other than that event– this is basically a test of resistance –failure– and tests of support likely.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support: $2.71, $2.60-$2.554,$2.483, $2.162
Major Resistance: $2.87, $2.89, $2.92-$2.997, $2.98-$3.05,
Minor Resistance:

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HMM– Not a Confirmation

Daily Continuous

So the rally runs into resistance at the Nov highs and then reverses creating a bearish reversal. I would not consider that a confirmation of the bullish bias that developed on high volume and gaining open interest on Monday, but as mentioned yesterday– you need to keep feeding the bull.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support:$2.806, $2.71, $2.60-$2.554, $2.483, $2.162
Major Resistance: $2.87, $2.89, $2.92-$2.997, $2.98-$3.05,
Minor Resistance:

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Is That a Breakout?

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Spoke yesterday about working the recent range until the market decided to break down or breakout– yesterday’s action (with high volume) could easily be a break out waiting for a follow through today. It is likely that some of the gains are related to short covering as prices came off late last week after Feb expiration. A key near term indicator for this run to extend further will be the volume and open interest – you must feed the bull which translates to volume and open interest gains.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support:$2.806, $2.71, $2.60-$2.554, $2.483, $2.162
Major Resistance: $2.87, $2.89, $2.92-$2.997, $2.98-$3.05,
Minor Resistance:

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Prices Finished Where They Opened

Regardless of the expiration of the Feb contract, the price action could not wait to test the low end of the support that the Feb contract had confirmed during its term as prompt. The declines are still within the recent range and have had no impact on the long-term implications that the market has provided since last July. See the chart below which was first sent a couple of months ago.

Weekly Continuation

The series of higher high and higher lows is the exact opposite of the declines experienced in 2019 and early 2020. That period was symptomatic of a series of lower lows and lower highs. As discussed, this market continues to be changing its long term bias from negative to more positive.

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Shocking After a Weak Close

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So prices ended the week on the lows only to find prices up $.15 on the Sunday open. Discussed here recently, how the market ends the week is not an indicator of how it opens on Sunday. Is what it is — prices continue to churn in a fairly narrow range ($2.80-$2.55) regardless of the prompt month. Trade this consolidation range near term until the market decides to break out or down.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support: $2.483, $2.162
Major Resistance: $2.74-$2.789, $2.89, $2.98-$3.05,
Minor Resistance: $2.806

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Extension Below $2.60

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What do you want me to say except “Range Trade”. Yesterday I wrote that prices rallied well above $2.70 only to retrace and yesterday prices rallied just below $2.60 only to correct and retrace most of those losses. Guess the storage report was neutral. If you are day trading this market— sell the rallies above the $2.70 and buy dips into the low $2.60’s– I am selling premium and going skiing.

Support: $2.373–$2.356,$2.255-$2.176
Minor Support: $2.483, $2.162
Major Resistance: $2.74-$2.789, $2.89, $2.98-$3.05,
Minor Resistance: $2.806

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