Prices dropped below $2.00 and suggested closing below that important area but found some minimal support. A close below that level sill suggest additional declines will be coming. Today will provide some important indications for the May contract and bias objectives going into the historically strong summer (power demand) season. We shall see. For me still in the range and at the low end.
Major Support: $2.00, $1.991-$1.96, $1.795-$1.766 Minor Support: Major Resistance $2.12-$2.184, $2.836, $3.00, $3.536, 3.595
As much as I would love to thrill you with some startling and creative technical interpretation of the price action– after yesterday — I am concerned whether you will continue to log in. Nothing more to add to the last few installments of the Daily but play the range with patience and stop losses.
Major Support: $2.127-$2.095, $2.00, $1.991-$1.96, $1.795-$1.766 Minor Support: Major Resistance$2.836, $3.00, $3.536, 3.595
Starting Sunday night, it was clear prices were going to test the $2.00 area and that is what happened. Finding limited support — not sure how far the run goes off of the test — continue the range trade if you are patient enough.
Major Support: $2.127-$2.095, $2.00, $1.991-$1.96, $1.795-$1.766 Minor Support: Major Resistance$2.836, $3.00, $3.536, 3.595
Prices start off Sunday night weaker, gaping lower and starting to test the $2.00 zone quickly as the May contract takes over as prompt. Trading to a low, rallying and then returning to that prior low and holding, is the primary method of natural gas defining a longer term low. This week prompt gas undercut the first low but failed to follow through to the downside re-defining support as a zone between two monthly lows, ($1.944 – $1.967). Not nearly enough time has passed to draw a definitive conclusion, but new prompt May ended Friday above the continuation 10 – day SMA for the first time since the failure of the rally from the February low, thatvery short – term moving average served as declining resistance at multiple daily highs since prompt April first closed beneath it on March 8th.
Major Support: $2.127-$2.095, $2.00, $1.991-$1.96, $1.795-$1.766 Minor Support: Major Resistance$2.836, $3.00, $3.536, 3.595
In my absence, prices decided to test the support at the Feb lows and break below it briefly. There have been some ugly monthly ranges traded since prompt gas turned down last August, the chart for calendar March is as ugly as any. After a technically positive calendar February prompt April promptly traded through the previous month’s high on March’s first trading day then before its tenure was over plunged through its low creating the first “outside” March since 1998 and the first ever to reverse to the downside (in ’98 the prompt first traded through the Feb low before rallying through and closing above the Feb high). The continuation monthly bar could have only been uglier if the close had been below the Feb low which owing to May’s premium over expired April and Friday’s only higher daily close of this week,, it wasn’t. The monthly chart of May gas did achieve that benchmark and is even uglier as it closed lower for the week, month, and quarter below its February low.
As patently bearish as the market seems, and expecting the consensus of technical indicators had weakened further from the prior week’s negative to neutral bias “ to outright negative, close examination indicated that was not the case. Almost none of those indicators confirmed the lower price low which either means they are out of step with reality and need time to catch up although recent price ranges have been relatively modest so that should not be the case, or the subsurface dynamics are diverging from the persistent price weakness. For example, last week average daily volume accelerated as April fell toward a new low weekly close and as has become the custom closed below the previous week’s low. Market internals…volume and open interest, which also continued to increase as price fell, strengthened the technical presumption that April would be offered lower before going off the board.
Solid run for support but prices couldn’t muster the strength to test the lows — in fact they just got to $2.127 before buying showed up. This area down to $2.095 will provide a major hurdle for further attempts at the Feb lows. Going to keep saying — play the range and sell premium when available. I am traveling to Mexico for the next seven days and the internet is not going to be an option. Should be back to look at the expiration during the middle of next week.
Major Support: $2.127-$2.095, $2.00, $1.795-$1.766 Minor Support: Major Resistance$2.836, $3.00, $3.536, 3.595
This is going to get interesting as prices seem to be destined to test the Feb lows and it will be interesting to see if the volume is there to accomplish the task. Until then — as spoken before — play the range and finally, the market is at the low end of the range.
Major Support: $2.00, $1.795-$1.766 Minor Support: Major Resistance$2.836, $3.00, $3.536, 3.595
Not much to add from the headline — go into some of the supporting discussion in the Weekly section. For now if you are a buyer, be patient — if you are a seller don’t be greedy (or maybe be greedy and get caught in the rebound similar to early March).
A lower weekly close and closing the week near the lows– clearly suggests that the market should head lower this week. Still trying to establish whether this market is going to tests the lows of last month, or does it find the buying to set a higher low and continue the thesis that a base is building for the Q2 run. While the continuation one – year strip did not record a lower daily or weekly close ($3.088 vs $3.060) the same could not be said for the summer ’23 and winter ’23 – ’24 both of which closed at a new weekly low. That weakness in deferred contracts (which had held up somewhat better than the nearby contracts) suggests a reduction of intermediate/long – term participant expectations and likely an increase in already substantial speculative short positioning. This actions suggests that speculative shorts are exposed to another and perhaps more significant event than occurred during the eight day period ending 03/03 (when prompt gas closed higher for seven of eight days while rallying from $1.967 to $3.027). Notwithstanding that potential expectation, the acceleration of weakness in the strips with the new low closes, indicate that at least for the near – term the entire maturity curve is likely to be vulnerable to the downside. New low weekly closes for prompt gas and the continuation strip will confirm the indication from the deferred that, at a minimum, the gas market intends to test the February low.
In recent weeks volume has on balance declined during rallies, increased when price fell. This past week average daily volume fell along with price and was only higher one day than the corresponding day the previous week. New contracts continued to be added to total open interest which has increased in all but two weeks since mid – December (both small declines). This week with prompt gas only $.029 lower from Thursday to Thursday (open interest lag one day) a modest 1,345 contracts were added. This is the smallest addition of any of those weeks. Both volume and open interest entered the past week with a price negative bias but earned an upgrade to neutral.
