Author: Willis Bennett

Early Trade Closes Gap

Daily Continuous

Price declines extended to the gap from the expiration– now the question is does the decline remain the focus with the storage release or are we running out of sellers at support as it has over the last few tests.

Major Support: $3.06, $3.00-$2.97, $2.843, $2.727, $2.648
Minor Support :
Major Resistance:$3.167, $3.19, $3.39, $3.62, $3.80-$3.85, $4.168, $4.461,

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Low Range Tested In Front of Storage

Daily Continuous

Prices inched downward yesterday and would expect today’s trade to test the bearish support from last month in the gap at $2.968 (weekly chart). We will start to get a idea of will this become the base for the upcoming Q4 run in prices.

Major Support: $3.06, $3.00-$2.97, $2.843, $2.727, $2.648
Minor Support :
Major Resistance:$3.19, $3.39, $3.62, $3.80-$3.85, $4.168, $4.461,

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Previous Low Tested

Daily Continuous

Prices extended the declines and tested the low from earlier in the month, but with volume declining the declines stopped at previous lows for the prompt. Does it seek additional support for the press lower — we shall see?

Major Support: $3.167, $3.06, $3.00-$2.97, $2.843, $2.727, $2.648
Minor Support :
Major Resistance:$3.19, $3.39, $3.62, $3.80-$3.85, $4.168, $4.461,

Reversal of the Reversal– Hello Range

Weekly Continuous

With the holiday today I am going to limit the commentary in the Weekly and Daily. The range traded on October 2nd was $3.402 – $3.585. November managed a higher close on Tuesday ($3.519) but volume was about 60,000 contracts less than the 10/02 reversal day. After extending the recovery to $3.550, .03 short of last week’s high, November collapsed (putting another high volume reversal day in place and further defining and strengthening the resistance zone. Total open interest fell on both the 10/02 and 10/08 reversal days, which strongly suggests that short covering and contract liquidation were significant contributing factors. Simply put, there was not nearly enough buying interest for prompt gas above $3.500 to support further extension of the rally or to prevent the significant reversals to the downside.

For the last nine weeks November has been confined in a well – defined range between +/- $3.10 and $3.50. The last weekly close outside that range was the first Friday of August. Last week, since trading the two daily lows that began construction of the lower boundary of the range, the current prompt has been briefly offered below that lower boundary twice…consecutive days on 09/22 & 23, and has now failed twice above the upper boundary. This week’s lowest close with the highest volume of any week during the consolidation is an indication that November will be offered lower again.

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Holiday — Lighter Trade

Daily Continuation

Not a whole lot of detail or technical interpretation beyond what was published in the Weekly section for the lighter trade expected today.

Major Support: $3.167, $3.06, $3.00-$2.97, $2.843, $2.727, $2.648
Minor Support :
Major Resistance:$3.19, $3.39, $3.62, $3.80-$3.85, $4.168, $4.461,

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Seeking Support

Daily Continuous

Not a lot of technical information on the activity yesterday other than the storage data provided the stimulus to seek the low side of the range. Still a range market no significant bias change.

Major Support: $3.25, $3.192, $3.167, $3.06, $3.00-$2.97, $2.843, $2.727, $2.648
Minor Support :
Major Resistance: $3.39, $3.62, $3.80-$3.85, $4.168, $4.461,

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No Change, Just a Test

Daily Continuous

I guess the upcoming storage data is going to be bearish as the market jumped on the price rises from the day before (I thought the data release was going to be affected by the shutdown). Regardless of the outside forces -, the price decline confirmed there is no bias change but rather a test of resistance that failed and retreated to the middle of the recent range.

Major Support: $3.25, $3.192, $3.167, $3.06, $3.00-$2.97, $2.843, $2.727, $2.648
Minor Support :
Major Resistance: $3.39, $3.62, $3.80-$3.85, $4.168, $4.461,

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Bias Change?

Daily Continuous

Unlike last week’s excursion over the 200 day SMA and the 40 week SMA prices held the gains into the close– now it will need to confirm the action. The next couple of days will confirm– the trade remains the range of late but be cautious of shorting the high side.

Major Support: $3.25, $3.192, $3.167, $3.06, $3.00-$2.97, $2.843, $2.727, $2.648
Minor Support :
Major Resistance: $3.39, $3.62, $3.80-$3.85, $4.168, $4.461,

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Prices Firm Within Range

Daily Continuous

The price action started strong and then leveled off — never testing the highs of last week but staying firm. Suggest working the range and if you’re selling premium in the option be cautious of the proximity to prompt as the market has not ruled out a run nor a collapse.

Major Support: $3.25, $3.192, $3.167, $3.06, $3.00-$2.97, $2.843, $2.727, $2.648
Minor Support :
Major Resistance: $3.39, $3.62, $3.80-$3.85, $4.168, $4.461,

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November Develops A Possible Range

Weekly Continuous

Discussed the large premium last week on the expiration of the October contract and rather than immediately build on that exceptional premium, the new prompt began the week by opening lower, $3.149 vs last week’s close at $3.206, still a premium of $.314 to October settlement. After fading to $3.133(narrowing the weekly continuation gap that extends down to $2.968), November rallied to test well – defined resistance at the top of a trading range that has confined it since mid – August. Although volume was nothing to write home about the prompt overcame resistance presented by its 50 – day SMA, then multiple weekly and daily highs, discussed during the week, and the trend line declining from the continuation March and June highs.

Most of us in the natural gas trading universe thought there were buy orders above that declining resistance. Once through it November spiked all the way to the 40 – week SMA. Wednesday’s close was $3.476, the value of the 200 – day SMA $3.483. There was also a gap between $3.475 and $3.494 and November closed that gap and then some…but could not close above the 200 – day. Instead, a high volume reversal day…with the highest volume since May 20th (an upside reversal day from a higher low that carried through until the June Q2 high).

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