Author: Willis Bennett

Starting To Evaluate Length

Daily Continuous

With prices gaping lower last week, prices were destined to challenge support levels from the summer. Discussed the week’s action and the ramifications, in the Weekly section and now this week we will look at the expiration of the Nov contract. Guesses suggest that a range has developed between the two gaps but the gaps also provides great targets. Generally, there remains a bullish bias to trend as there are a series of higher lows with higher highs– but the December premium gives me pause for serious length.

Major Support: $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.84, $2.38-$2.26, $2.17
Major Resistance $3.00, $3.185, $3.42-$3.48, $3.536, 3.59

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Break Out Support Zone Breached

Daily Continuous

The break down through the break out zone can not be understated from a technical standpoint. The question becomes does the decline continue to test the gap from the expiration or does support commence before.

Major Support: $2.82-$2.78, $2.74, $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.99, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59

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Shrinking Range Continues

Daily Continuous

Not a lot to add to from yesterday, except the declines yesterday occurred on low volume after the price rallied in the early trade. Would play the range into the storage report.

Major Support: $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.04-$3.028, $2.99, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59

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Similar Activity

Daily Continuous

Similar to the previous months, prices moved in a direction tested the support or resistance then spent some days in a consolidation pattern deciding the next directional bias. We shall see what happens this month as prices seem to be consolidation just above the support break out area.

Major Support: $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.04-$3.028, $2.99, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59

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Solid Initial Test

Daily Continuous

As expected, prices tested the high end of the break out zone from last week. From that test, the price action set up a small rally to settle over $3.10. The market should continue to test the lows and provide good low risk opportunities to enter the market with low risk stop areas.

Major Support: $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.04-$3.028, $2.99, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59

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Support Zone Needs Testing

Daily Continuous

Last week the price declines fell well short of expectations for a test of the break out and spent the week quietly testing old highs for November– this week should provide a different view as I discussed in the weekly section. A small range may develop similar to last month between the break out and last week’s highs.

Major Support: $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.04-$3.028, $2.99, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59

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Break Out Confirmed — So Far

Weekly Continuous

Technical analysis holds that once price has broken through the upper boundary of a well – defined range of significant length and done so with internals confirmation of the break, the technical expectation is that the prompt will return to test the breakout level. If the breakout is valid volume during the retracement will diminish and open interest will fall–not necessarily back to the prior low (the total number of contracts outstanding on 09/27 with price at $2.764 was the lowest since 01/30). Support bracketing the old range boundary will limit further decline and prompt gas will trade a higher low and begin to recover for a retest of immediately preceding high. Assuming that price action confirms the breakout level the last low and the higher low will provide anchor points for a new short – intermediate term uptrend. In the current case the upper boundary of the trading range was defined by the March high and then the August and September highs, all between$2.997 and $3.027.

Discussed a comparison to a similar range constructed between Q4 ’20 and Q2 ’21 . Once that construction was resolved to the upside prompt gas did not exactly conform to the expectation of testing the breakout. Rather, trade went very quiet for over two weeks then prompt gas tested support and provide an anchor point for a rising trend line that held over the next four months.

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Storage Can’t Induce Volatility

Daily Continuous

A bullish injection report sent prices to the high of the day only to spend the rest of the trade day declining back to where they started. Perhaps it consolidates for a while but the same result as the range trade between $2.70-$3.00 last month will likely end in a similar result–question is outcome a higher break out or a retest of the $3.00 break out area.

Major Support: $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.04-$3.028, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59

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Nothing to Add From Yesterday and the Spot Nov Chart

Daily Continuous

Discussed why price run failed where it did yesterday — nothing to add. Perhaps, a storage release will provide momentum to confirming the bias started last week or provide the selling to test the break out zone.

Major Support: $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.04-$3.028, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59

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Prices Seem “Comfortable” With Levels

Daily Continuous

Prices remained calm through the digestion process and nothing seems to stick out from a technical perspective on the Continuous chart above. That said the Spot Nov charts sheds some additional light on why the pause at $3.47-$3.48 area. Look at the spot November chart below below, the area was the high from trade in August on that brief test of resistance while Sept was prompt.

Spot November Contract

From this area there is little resistance in the spot chart until the early March highs.

Major Support: $2.608, $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $3.04-$3.028, $2.84, $2.38-$2.26, $2.17
Major Resistance $3.42-$3.48, $3.536, 3.59