Major Support: $1.611 Major Resistance: $1.99, $2.029, $2.08-$2.10, $2.34, $2.437, $2.48-$2.52, Minor Resistance: $1.883,
Last week looked calm from the trade range standpoint, as prices closed the week higher. However, it was a classic outside week reversal for natural gas on significantly higher volume after prices tested the lows (failing to extend lower) from numerous years (discussed on the website). While the range is intact for day trading, it is time start being aware of the issue that the market may be changing its stripes.
Major Support: $1.611 Major Resistance: $1.98, $2.029, $2.08-$2.10, $2.34, $2.437, $2.48-$2.52, Minor Resistance: $1.883,
This range is working out very well for some incremental revenue but eventually it will break — one way or the other. Look for a test of support now that prices rallied $.30 , only to be rejected at resistance. Until then trade the range and garner some light profits.
Major Support: $1.611 Major Resistance: $1.98, $2.029, $2.08-$2.10, $2.34, $2.437, $2.48-$2.52, Minor Resistance: $1.883,
Over the night, prices tested major support from various years and then rallied off those lows. As explained yesterday, continue to work the range and let the prices trade the range until information changes.
Major Support: $1.611 Major Resistance: $1.98, $2.029, $2.08-$2.10, $2.34, $2.437, $2.48-$2.52,
Minor Resistance: $1.883,
Prices are testing the support from numerous years between 1996 through 1999 and ’10, ’15, and ’16. Have no clue what will happen with all the outside interference from crude and the virus. Will be interesting to witness how the market reacts. From trade perspective, buy support and sell the resistance.
The market remains with a bearish bias. After failing two weeks ago at resistance at $2.029, price have drifted lower as both the speculative long and short traders have been reducing positions (see CFTC data below). Have discussed the history of Nat Gas trading to a low in Q1 of the year and in four of the last ten years the low has occurred in April (slightly beyond the calendar quarter). Currently, support is holding between $1.61 and $1.76 which represents the lows from ’96, ’97, ’98, ’99, ’01, ’15 and ’16. Needless to say, this is a very strong level of support.
Monthly Contiuation
Prices have retraced to support in the Monthly chart above. As discussed in the Weekly above, how long this support holds (and from where) is the key for the upcoming annual second quarter run for prices. The average gain from Q1 lows to Q2 highs is nearly 40% over the last ten years. Last year’s run was well below the average, with just a paltry 8% gain. These 2nd quarter gains in price have occurred in various stages of fundamental supply and demand imbalance levels – highlighting the supply situation of this winter may provide a muted impact this year, though the short interest by the speculators may keep this year’s rally well within the historical averages. The potential break-out areas for any rally will be the area of failure last months and the lows from August ’19 which held support from August to January. Alternatively, per the Weekly above, declines will start to hit major support areas from many years.
Major Support: $1.753, $1.611 Minor Support: $1.705 Major Resistance: $1.983, $1.994, $2.029, $2.086 Minor Resistance: $2.124
Commodity Futures Trading Commission
Natural Gas Managed Money Long (red) vs Managed Money Short (purple) positions
CFTC Report Dated for Positions on March 3rd
The chart above indicates the historical extreme short position of the speculative component to trade. History warns the traders that such extremes will not last long, though don’t indicate an immediate reversal. Over the last two weeks the short position has been reduced and the effect of the short covering was offset by the Managed Money Long position selling into the short buying. As long as this behavior continues, the expected short covering rally may be more muted than expected. Currently, the market remains under a bearish bias meaning that the short covering rallies may continue to be slow and inconsistent.
Major Support: $1.611 Major Resistance: $1.98, $2.029, $2.08-$2.10, $2.34, $2.437, $2.48-$2.52, Minor Resistance: $1.883,
Excitement rules the market as price fell on the storage release. I am neither bullish nor bearish on Nat Gas as the volatility in the stock market has focused my interests. Remember, I am a trader — I want volatility and Nat Gas is not bringing it on yet. So now we sit chasing the low end of the recent range — think as a trader, I will be buying dips into the $1.60’s — Duh. Does it get down to the lows from 2016 at $1.611 — no clue as it has been bought well before, recently. What happens if it dips below that support— Where is the gas market headed —- OOOOHHHH My.
Major Support: 1.611 Major Resistance: $1.98, $2.029,$2.08-$2.10
Well that Daily got some comments and some of you sent links trying to explain why the market was finding support — Thank you for your efforts. I believe that he market is finding support, just as it has every year, as the results of winter end and summer begins during the second quarter. Again, I do not follow supply and demand, but believe that supply and demand is interpreted in the price action. It seems that the balance may be coming tighter and that is why prices are finding muted support. Close above the 10 day average (big whoopie) but this support and resistance test game is far from over.
Major Support: $1.611 Major Resistance: $1.98, $2.029,$2.08-$2.10 Minor Resistance: $1.883
What is up with this movement— some of the physical traders are questioning me on why prices are rising. No clue from the physical perspective as I don’t look or care about storage etc. Prices are rising so far this week because markets need to test support and resistance and gas is trying to test resistance after testing support last week. One physical trader said I was way off on 1.7 TCF for ending inventories—— DUH—- that was the low end of expectations (from what I hear) and the reason I sighted it was “who cares”, the weather forecasts and storage ending inventories are built into the market currently. Does 1.7 or 1.9 make any difference to the enormous short position currently in the market. Where do some of you think the current short position came from— (sarcastic rhetorical question).
Taking a look at the longer term trends of the Natural Gas contract the market remains with a distinctive negative bias. This is consistent with market history as Nat Gas trades to weakness during Q1 of the calendar year. In the last 10 years, the market has traded to the low prior to the expiration of the Feb contract once. In four of the last ten the low was postponed until April (slightly beyond the end of the quarter). The other five traded to the low after the Feb contract expiration and in the last four years the low was establish between 02/15 and 03/04.
Not crazy
Monthly Continuous
Prices have started to gain limited support in the Monthly chart above. How long this support holds is the key for the upcoming annual second quarter run for prices. The average gain from Q1 lows to Q2 highs is nearly 40% over the last ten years. Last year’s run was well below the average, with just a paltry 8% gain. These gains in price have occurred in all stages of fundamental supply and demand imbalance levels – highlighting the supply situation of this winter may not have a muted impact this year. The key areas of resistance to the seasonal run will be the lows from August ’19 which held support from August to January when the support was broken. Should the run be delayed and weakness resumes – the lows from this month down to the multi-year low from March ’16.
Major Support: $1.753, $1.611 Minor Support: $1.705 Major Resistance: $1.983, $1.994, $2.029, $2.086 Minor Resistance: $2.124
Commodity Futures Trading Commission
Natural Gas Managed Money Long (red) vs Managed Money Short (purple) positions
The chart above indicates the historical extreme short position of the speculative component to trade. History warns the traders that such extremes will not last long, though don’t indicate an immediate reversal. This information should be put into the perspective of what is likely to happen at some point in time (short covering rally). How far that rally takes prices is subject to where it starts and under what circumstances. Currently, the market remains under a bearish bias meaning that the short covering rallies may be slow and inconsistent.
Major Support: $1.611 Major Resistance: $1.98, $2.08-$2.10, $2.34, $2.437, $2.48-$2.52, $2.716-$2.755 Minor Resistance: $1.901, $1.994, $2.21
As you can tell from the picture I have changed the format of the charts and hope to hear any comments you have regarding the change. Trying to make them more effective for the reader. I thank all of you who have commented.
