Author: Willis Bennett

The Process Continues

Daily Continuous

Usually there are short – term trends between that support and resistance but when volatility is elevated those boundaries are defined by high volume highs and lows. For May gas there was a high volume low on 02/18 at $3.628, another on 03/03 at $3.810. It is pretty rare but in both cases high volume highs were traded on the following day at $4.326 and $4.588, respectively. In both cases the combined volumes of those two days is greater than any other two day period. The zone between the lows is definable support, between the highs is resistance. Volume is the energy that drives price higher…or lower. Volume on the day of the price spike to $4.901 was substantially lower than on the days that defined the zone of resistance (discussed in the Daily). The energy to drive prompt gas higher was simply not present, hence the breakout failed. Also note that volume was lacking on 03/27 when May tested the support and the breakdown failed. While, price and volume are doing the right things for prices to eventually move higher, a correcting substantial increase in volume is going to be required in order for that to occur. I stand that the market will need to consolidate and build for that sponsorship to develop and until, it is going to be range bound.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.00, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

Supported Expiration

Daily Continuous

Found it interesting that the May contract went down to the key mid term support at $3.74 before building a rally. Will stay away from this market today and set up some option strategies for the Q2 rally coming in the next few months.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.00, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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Nothing New as Expiration is Upon Us

Daily Continuous

Nothing has occurred that wasn’t discussed in the Weekly and Daily on Monday– so I chose to be quiet. Nothing really happened yesterday that was dramatic or earth shattering to a technical interpretation but I did want to send a quick flag for the expiration– It should hold the March lows of $3.742 and if it breaks that level we may see a brief test of the major support sub $3.60 with the April contract or the May contract as it takes over as prompt.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.00, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

Weak Close Suggests More Down Side

Daily Continuous

While the down side movement has now created “mixed” signals to the bias going forward, the move during March still embraces a more bullish environment for gas prices longer term. As far as April goes this week the headline says it all. The way market has finished the last couple of weeks, does not instill supreme confidence of a rally into the expiration — but rather the opposite.

Major Support: $3.60-$3.584, $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.00, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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New April Closing Low

Weekly Continuous

After consolidating in a daily closing range of about $.20 for five days April violated a slightly rising short term trend line with the highest volume of the week. The low of the week followed but sponsorship at the continuation 50 – days SMA limited further decline. Prompt gas tested, held and recovered from the continuation 50 – day for the third time since 02/18, but the violated trend line limited the recovery and April closed below $4.00 for the first time during March.

For all but an hour or so that the spike to and failure at $4.901 lasted, April has spent its entire tenure as prompt between a high volume low traded on 03/03 ($3.742) and a high volume high traded on 03/04 ($4.551) . The extremes of those two expanded ranges present important support and resistance for the upcoming months) particularly the lower one which now is approximately equal to the 50 – day SMA of soon to expire April gas.

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A Break Below $4.00

Daily Continuous

Price action broke through the $4.00 level which has been a formidable area of support for nearly a month– now what? I am going to consider this with a “neutral” bias and will wait to see confirmation today. Want to look at the volume and open interest levels from this week and relate them to the price declines. What happened a few days back (higher highs on higher volume and increasing open interest) should not be discounted to the semi-weekly reversal mentioned in my Weekly on Monday. The market (as it does quite often) is sending conflicting technical signals.

Major Support: $3.16-$2.97, $2.727, $2.648,
Minor Support : $3.827-$3.801 $3.742
Major Resistance: $4.00, $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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Consolidation

Daily Consolidation

No Daily yesterday as there was no change to comments from the day before– wanted to just make the comment today (even though nothing changed) that the market wants to test resistance after a very weak challenge of support. The fact that the challenge was so weak is important to understand that there seems to be an underlying support for prices above $4.00. Time will tell.

Major Support: $3.16-$2.97, $2.727, $2.648,
Minor Support : $4.00, $3.827-$3.801 $3.742
Major Resistance: $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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Testing Low End of Range

Daily Continuous

Mentioned in the postings yesterday that the market would likely develop the range for trade and it seems to be setting the low end. From the short side it may correct to the $3.70 area but would not be aggressive chasing that level. The low extension may provide the opportunity to clear some put positions– other than that — play the levels in the range.

Major Support: $3.16-$2.97, $2.727, $2.648,
Minor Support : $4.00, $3.827-$3.801 $3.742
Major Resistance: $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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Prices Rally to Run Out of Buyers

Daily Continuous

Big run up in the Sunday night market only to find ample selling when the full market opened. Last week’s behavior was informative (discussed in the Weekly section) but did not totally resolve the near term direction (nor the definitive bias component). We now sit in a new range market that will lead us either to consolidation, confirmation (bias), or capitulation (breaking the low end of range).

Major Support: $3.16-$2.97, $2.727, $2.648,
Minor Support : $4.00, $3.827-$3.801 $3.742
Major Resistance: $4.168, $4.461, $4.501, $4.551, $4.746-$4.75, $5.031

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Slight Reversal of Fortune

Weekly Continuous

April gas opened at $4.467 and quickly extended the rally to $4.901 (the highest price paid since 12/28/22) but the sponsorship/volume did not develop to support the higher price and prompt gas reversed lower. After setting a higher high before running out of support, the market quickly reversed and sold off in a quick three day fashion. Unfortunately (for bears) it did not reverse through the previous week’s low, and it lacked a significant volume compared to the previous weeks. Though prices clearly reversed — from a technical standpoint — it can’t be considered a weekly reversal– but it does indicate that the recent strength may be weak in the teeth and further jumps in prices will have significant road blocks between $4.50-$4.90 in the coming months.

The market has been trading in ranges for the last couple of months and perhaps the current market is setting up the new and next range $3.75-$4.90.

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