Author: Willis Bennett

Weekly Continuous

After breaking through the support trend line from the October and December lows (discussed last week from the support standpoint) on Monday the soon to expire prompt left a small gap to the downside when trading resumed. February managed to close that gap but could rally no further and (as mentioned) the trend line could not hold. With volume increasing, the continuation trend line…which had guided successive prompts higher since the October low, was violated on a daily (weekly also) closing basis and becomes resistance in the future.

Since prompt December traded to $3.563 in mid – November with a weekly volume of 3,830,545 contracts– higher highs have been traded with less volume, this behavior is considered reliable volume divergence. The week of the last of the higher highs, 3,426,087 contracts changed hands…and interestingly traded on the anniversary of the high close during January ’24. In addition to the volume divergence, the weekly RSI had failed to confirm either of the last three weekly closing higher highs.

Daily Continuation

Weekly Continuous

The most interesting near term technical factor is the trend line rising from the continuation October low (see Daily chart above). Similar trend lines rising from the December lows of February and March gas (See March gas below) were tested during the past week. Each time their recovery from the rising support attracted less volume.

Going into expiration period over the next three days. Expect the trend line to continue to guide prompt gas higher toward resistance defined by the zone between the December and January highs. Should the trend line (support) violation break — it likely to announce the beginning of the decline toward a late Q1/early Q2 seasonal low. Expect significant moderation of price as we progress through Q1. The average decline from Q4/Q1 highs to late Q1/early Q2 lows is a little more than 40% for successive prompt months, less for deferred months. There is likely to be a substantial “expiration” gap after February expires. That gap will provide the market important resistance to an extension of any rally in March gas.