Author: Willis Bennett

Hangin on the High End of Range

Daily Continuous

Don’t believe we are going to get a solid test of the late Feb high over $3.00 during the expiration process. The market should test that level during calendar July. Play the recent range leading into the Aug take-over.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:$2.47, $2.38-$2.26, $2.17
Major Resistance $2.707, $2.816-$2.836, $3.00, $3.536, 3.59

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A New Game Has Emerged

Daily Continuous

Go into more specifics in the Weekly Section, but sentiment has changed in the gas market–yes prices are low compared to the last year but the near term has a more bullish bias to it than it did a month ago. A lot of the buying last week was mostly short covering (open interest declined 57,000 contracts — Thursday to Thursday). I do not need to remind you that short covering is great for a short term rally but not indicative to a long term that will take prices higher over time. Stay tuned this week, to see how the market responds to expiration and the recent short covering.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:$2.47, $2.38-$2.26, $2.17
Major Resistance $2.707, $2.816-$2.836, $3.00, $3.536, 3.59

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Bias Change Confirmed

Weekly Continuous

Last week, price action confirmed the previous speculated bias conversion to a bullish market with a couple of declines to support areas and finding buyers prior to achieving the support levels. In the Daily a series of higher lows confirm the Weekly chart above showing the series of higher lows in the last three months. Would suggest buying any dips in price action in the expiration week coming — but that in itself is a risky proposition. Perhaps a more conservative approach would suggest buying dips with built in sales prior to the $3.00 area as that will find significant selling on the first approach. Am traveling this week and next so the Weekly and Daily will be brief until events command more commentary. Key to this week is relax and buy dips to support.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:$2.47, $2.38-$2.26, $2.17
Major Resistance, $2.707, $2.816-$2.836, $3.00, $3.536, 3.59

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Consolidation Confirmed

Daily Continuous

Informative trade as the storage report punished prices but prices rebounded from the lows. That would qualify as a confirmation of the range being established for the short term. Play the range from the lows of the week to the highs of the week.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:$2.47, $2.38-$2.26, $2.17
Major Resistance$$2.685, $2.707, $2.816-$2.836, $3.00, $3.536, 3.595

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Range Starts To Develop

Daily Continuation

As suggested, prices have now started to develop as prices declined to find an area of support (zone around the breakout zone in the mid $2.40’s) then prices to rally back into the declines from yesterday. Today will be interesting as the volume will help define the upcoming range for prices in the near term after the storage report is released.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:$2.47, $2.38-$2.26, $2.17
Major Resistance$$2.685, $2.707, $2.816-$2.836, $3.00, $3.536, 3.595

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Prices Test Break Out Zone

Daily Continuous

Could not upload the current Daily Chart but prices declined to test the zone where the market broke out last week. Normal for a short covering rally to run out of buyers — then the profit takers take profits on the run. Now the market will establish the potential low end of a new trading range -only to test the highs already established.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:$2.47, $2.38-$2.26, $2.17
Major Resistance$$2.685, $2.707, $2.816-$2.836, $3.00, $3.536, 3.595

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Bias Change

Weekly Continuous

I have been dancing around the potential of a bias change occurring the gas market for a couple of weeks with the series of higher lows over the last two months, volume increasing on the positive trade days, increase in open interest in rallies and the breakout of the resistance zones that have held the market rallies for three months. Some of those elements came to fruition last week with break out above resistance in the high $2.40’s and the ensuing run up to the highs from earlier in Q2 on the continuation charts. Some of the buying was clearly short covering as the resistance areas were penetrated.

With the well defined support zone at $2.00 and below the last three months have provide a consolidation base for the current run. Now the question will be how far does the rally run prior to expiration. May high of $2.685 up to the highs for the July contract at $2.707 to $2.816 will likely provide to much selling for prices to extend much beyond.

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Short Covering Rally Occurs

Daily Continuation

Disscussed in the Weekly section one of the results of breaking the decline trend line of resistance… and that violation triggers a substantial short covering rally…. (occurred yesterday). While that may happen there is also a third option is that prompt gas works its way through the declining trend line of resistance, which adds substantial evidence that a very significant low is in place, rallies for a few days, which it should as some short covering is absorbed. This event would take prompt July to the area around the April high ($2.529), is a likely objective for the July prompt. Little did I know that would occur in three days (primarily one day). Look for prices to consolidated and re-test some of the gains from yesterday.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $2.38-$2.26, $2.17
Major Resistance$2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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No Change

Daily Continuation

No change from yesterday’s publication.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $2.17
Major Resistance$2.413, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Daily Close Above Declining Trend Line

Weekly Continuous with Trend Lines of Support and Resistance

As hypothesized in the Weekly section earlier in the week — a break above the trend line may provide some short covering movement extending prices higher. Would not expect a major covering rally but one that should take prices well above $2.38 and into the $2.40’s. A key will be does the break above hold the Weekly chart– if not then its a false breakout and back to test support.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $2.17
Major Resistance$2.413, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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