Understand the large gap from last Friday to yesterday was inclusive of the discount that March maintains to the Feb expiration– So all I can theorize is this bear market wants to test the numerous support zones mention in the Weekly area and then see what happens. Good luck picking your low.
Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766 Minor Support : Major Resistance $2.45, $2.56, $2.64, $3.00, $3.16, $3.48, $3.536, 3.59, $3.65
Momentarily, I thought my analysis last week in the Weekly was spot on as the differential between Feb and Mar narrowed down under $.30 for a very brief period of time. After the previous week’s weak close, the market strongly suggested February would be offered lower (hence the confidence in closing the differential). It was almost a given that any rally by the suddenly oversold prompt would be sold at a lower high. Surprisingly, February recovered as much as it did, but not surprised when it reversed lower from $2.884 (the continuation 20 – week SMA was $2.877). The violated daily trend line and important moving averages provided daily closing resistance but little else can be drawn from the wide ranging days other than the to date calendar January trade low is higher than the December low.
It is difficult to put a bullish spin on the price action last week but the March chart develops a few factors that serve to mitigate an overly bearish outlook. Perhaps the most significant of those is that March is sitting atop support that is more distinctly defined than at any time since the spring of 2020,(see March chart below) and before that during the late winter/early spring of 2016. Won’t spend a lot of time on those historical levels of support and how they were tested and held, currently, but long time readers will hopefully recall long past discussions of the consistency of prompt gas to trade in four year cycles. While not always exact…some a little longer, some not quite as long, that cycle can easily be observed since the beginning of natural gas trading in the spring of 1990…most recently 2012, 2016, 2020…2024??
Prices got a solid bid during the night on Wed night — so much that it challenged $2.88+. Did not last long, when the market came in and declines started in earnest and broke below the previous close. Interesting to watch — but I would not trade this market until it defines solid support and resistance. Remember, that the Feb is now at a $.40 premium to March and March is trading in and below a major support zone.. Going to take a casual approach to this expiration — focusing more on the continuation charts.
Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766 Minor Support $2.47, $2.38-$2.26, $2.17 Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65
Prices are not going to $2.00 (at least not in this decline) as the usual suspects of sellers dwindled as prices challenged $2.20. In yesterday’s consolidation trade the gap from earlier in the week was closed and prices extended up another dime. Now we have a storage report and the price remains in the middle of the current near term.
Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766 Minor Support $2.47, $2.38-$2.26, $2.17 Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65
As discussed yesterday, the market seemed to be running out of sellers and is now consolidating on the next extension of declines and/or a correction with in the range established from the early Dec lows.
Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766 Minor Support $2.47, $2.38-$2.26, $2.17 Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65
Prices opened the day and week with a gap and then proceeded lower before spending the remainder of the day gaining back some of the losses. The open may have been a tad aggressive and per behavior last month, the market ran out of sellers. Not expecting a cover rally but the market is likely going to consolidate the recent declines.
Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766 Minor Support $2.47, $2.38-$2.26, $2.17 Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65
Discussed the technical damaged suffered by prompt gas this past week, in the Weekly section– from there I can propose some of the following trade ideas — expect February settlement to be discount to January ($2.621). Though prices in the late Sunday trader are already challenging- expect March to find support/sponsorship between +/- $2.100 (March’s December low was $2.098, the low of a daily reversal) and $2.240 (the past week’s low was 2.237). As mentioned in the Weekly section–expect the historically important January low to be traded during the two days following February expiration. Failure of March to rally during the coming week will suggest a strong possibility of a test/violation of the continuation December low ($2.235).
Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766 Minor Support $2.47, $2.38-$2.26, $2.17 Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65
More often than not a price spike with a significant contribution from short covering is followed by a price vacuum once the buying that caused it is exhausted, and at least a retracement of the gain. A decline of $.794 (nearly 25% of price at last week’s close) would be considered outside the range of expectations of this analyst. Rather than opening higher after the three day weekend, February was immediately offered $.20/dt lower. There was no gap because of the wide daily ranges of last week’s rally, but the best February could do was a trade to $3.189 ($.124 below the previous Friday’s well – bid close-which turned out to be the high for the week. There was a short – lived bounce off the 50 – day SMA but nothing that resembled one at the trend line drawn from the December lows, which I had thought would guide success prompts higher. Nope- February fell unabated through multiple levels of conventional, moving average, trend line and moving average support. By the week’s amply offered close , prompt gas had returned to the band of weekly closing support ($2.469 – $2.548) that has limited every decline since the recovery from the June low.
While volume was lower during the decline last week — I guess you could consider it kind of a dubious positive technical factor. Although less than a week earlier turnover was higher than average. It also certainly appeared that surviving speculative short sellers returned with a vengeance…open interest for the three trading days between Tuesday and Thursday (open interest statistics lag one day) increased 28,363 contracts. Were just setting up for the next round.
After all the drama from the combined Monday/Tuesday trade the action and volatility slowed yesterday as the prices entered the comfortable range trade of the last few months. This behavior should likely continue for the next couple of trade days. Will be interesting to watch the next two storage reports have any impact on price action.
Major Support:, $2.00, $1.991-$1.96, $1.795-$1.766 Minor Support $2.694, $2.62, $2.47, $2.38-$2.26, $2.17 Major Resistance $3.00, $3.16, $3.48, $3.536, 3.59, $3.65
