Author: Willis Bennett

Extension Downward

Daily Continuation

Subdued, but effective, were the slight declines in yesterday’s action. This behavior may continue as the Nat Gas European based platforms declined as well. Why do I bring these platforms into the conversation– was looking at some charts and found some similarities to the British and Dutch products and the U S gas contract. There may be more influence from offshore contracts than historically thought.

Major Support: $2.882, $2.853, $2.789, $2.657-$$2.637
Minor Support:$2.743
Major Resistance: $2.98-$3.05, $3.091, $3.151, $3.24, $3.361-$3.370,
Minor Resistance: $2.905, $2.922

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Break Down

Weekly Continuation

How much more bearish can it get — weekly reversal — blows through support $3.00 and continues to decline. This is likely headed to the 200 day in the Dec chart ($2.853) and then beyond to the Sept high at $2.823.

Total volume last week was higher slightly than the previous week when December traded near $3.40 The previous week was the least volume of any week since mid – July (the third lowest weekly volume this year) when prompt gas was still in a range below $2.00. Higher highs on declining volume is a warning that has characterized numerous significant highs in the past.

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Brutal Break Lower

Daily Continuation

What can you say– that was a weekly bearish reversal and all the charts do not look favorable for the bulls. I remember having similar thoughts two weeks ago after the bullish close and the rally off of the large gap from expiration, only to watch the market try to rally — fail– and push significantly lower. Now the same could be said about the market from a negative perspective– it has to expand prices lower– right. While I do not expect prices to drop another $.40 this week– there may be some extensions lower per my conversation in the Weekly section.

Major Support: $2.882, $2.853, $2.789, $2.657-$$2.637
Minor Support:$2.743
Major Resistance: $2.98-$3.05, $3.091, $3.151, $3.24, $3.361-$3.370,
Minor Resistance: $2.905, $2.922

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Light Consolidation

Daily Continuous

After two days of declines, over $.35 in declines (10%), prices took a day of rest before the storage release. Needless to say, the over bought bias has been mitigated immensely and now it is up to see how the market interprets the first potential withdrawal of the season. Now you know I don’t track this type of information, rather I was told about the potential by a client. If it is a withdrawal — I would think that is a positive for the market — but then again what do I know. From a technical standpoint– the market is at a low risk area to enter length or shorts as the stop outs positions are under dime away – either long or short.

Major Support: $3.047-$2.98, $2.907, $2.882
Minor Support:$2.84
Major Resistance: $3.091, $3.151, $3.24, $3.361-$3.370, $3.423, $3.516

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Awaited Test of Support Occurs

Daily Continuation

Discussed here for the last couple of weeks, regardless of the Nov expiration and price break above $3.047 (old gap from 2019) it was likely that the December spot contract was going to test this area. That event occurred yesterday. Whether or not there is an extension downward, remains unclear but if price don’t today they are missing a great opportunity.

Major Support: $3.047-$2.98, $2.907, $2.822
Minor Support:$2.84
Major Resistance: $3.151, $3.24, $3.361-$3.370, $3.423, $3.516

Slight Softening

Daily Continuous

Prices opened weaker and extended the losses as the morning advanced, closing just off the lows. This action softened the over bought status discussed in the Daily and Weekly sections yesterday. Lacking any fundamental drama, these declines may challenge the lows from last Thursday ($3.15) before the storage release. The key question will be the gap that was discussed in the Weekly Section.

Major Support: $3.19, $3.101-$3.091, $3.047, $2.907, $2.822
Minor Support:$3.151, $2.98, $2.84
Major Resistance: $3.361-$3.370, $3.423, $3.516

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Bullish Close to the Week

Weekly Continuous

Prices closed at the highs of the week after trying to close the gap remaining from the premium that was afforded the December contract. This creates the second gap remaining in the Daily charts from the expiration premium (see chart below – highlighted by the dotted red lines). December traded as low as 3.151, narrowing the gap to a dime, before the highest volume day of the week indicated sufficient interest that the new prompt closed higher for the day extending the rally through its September high (3.362) in the after market trade.

These areas will provide support to the market in any extended declines. A confirmed close below the December expiration gap will assure a test of what is now long term support from the key area from the November contract between $2.98-$3.05.

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Crossroads

Daily Continuous

The market has created a short term decision on extend the gains higher or consolidating some of the gains from Thursday and Friday’s dramatic move. That move started to challenge the high for the Dec contract (break it in late day light trade) and has all the elements to break above the old highs and set new high. Only problem with the bullish configuration is the over-bought condition of the market, the RSI on both the daily and weekly charts is extended into the extreme levels and the Bollinger Band study is beyond 2 standard deviations on the high side – confirming the over bought status. This market is at a crossroads of setting additional highs this week or consolidating the gains achieved with the Dec contract.

Major Support: $3.19, $3.101-$3.091, $3.047, $2.907, $2.822
Minor Support:$3.151, $2.98, $2.84
Major Resistance: $3.361-$3.370, $3.423, $3.516

Declines Expected, Is That It?

Daily Continuous

The declines, narrowing the premium left after Nov expiration, was expected but did not see $3.15 as support that would reverse prices $.17 higher. Clearly, some shorts looking for supportive news from the storage release got caught. Is this the only test of the premium low? Not sure, but we know from the Nov contract, where prices declined for the first four days of Nov being prompt, the gap from the premium never closed. In the Nov contract prices declined 15% and yesterday’s declines are only a 5% decline. Major issue for the bulls is the high for December gas is only a nickel away. Must make this call– as my Weekly discussed, two weeks ago, that gap area around $3.05 has now defined itself as major support for the near term. The fact that yesterday’s decline never tried to test that area does little to alter this view.

Major Support: $3.19, $3.101-$3.091, $3.047, $2.907, $2.822
Minor Support:$3.151, $2.98, $2.84
Major Resistance: $3.318, $3.361-$3.370, $3.423, $3.516

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Again, Failure at Resistance

Daily Continuous
Spot December Contract

Similar but not as much, November expired at a $.28 discount to December. Recall the premium Nov had to Oct was twice as much and Nov immediately declined but did not close that gap. I have been mentioning that I was expecting the Dec to decline to the key gap zone ($2.98-$3.047) regardless of whether the Nov contract closed and confirmed that gap. The market has shown no reason to diminish that expectation.

Major Support: $3.19, $3.101-$3.091, $3.047, $2.907, $2.822
Minor Support:$2.98, $2.84
Major Resistance: $3.318, $3.361-$3.370, $3.423, $3.516

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