Author: Willis Bennett

Will Price Action Continue Upward

Daily Continuous

At the time of this writing, it looks like trade want to re-visit the lows from last week — but as always be careful of trading on the Sunday action. Last week had some important strength discussed in the Weekly section, but it was a slight technical improvement to the bearish bias. We continue to be a range trade environment — so behave accordingly.

Major Support:$2.134-$2.14, $2.12, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Expected Test of Closing Action

Daily Continuation

Mentioned earlier in the week that the expectation of prices to test support after June took over as prompt and that is what happened yesterday — but I must admit that closing some of the premium afforded to June was not expected. I thought the price action would carry down further into the closing range of the May contract. Apologies for the lack of a Daily but I did not know I would be without internet while up in Montana yesterday. The bearish storage report should of done more damage to prices than yesterday’s declines. We shall see if there is additional extensions lower today.

Major Support:$2.134-$2.14, $2.12, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.36, $2.836, $3.00, $3.536, 3.595

Strength Continues

Weekly Continuation

Following the week ending “outside” day reversal with a close near the session’s high, two Friday’s ago, the now soon to expire prompt gapped through the still declining moving average when trading resumed last week and formed a daily continuation gap that remains open between $2.132 and$2.140 ( it has been a while that a support gap has not been filled immediately). That gap higher opening kicked off an extension of the rally, the first three day rally since the recovery from the February low. At the high point of the two weeks late February/early March rally (which also occurred on a Friday) then prompt April failed at the declining 10 – week SMA and that is exactly what the two weeks rally from the April low did ( so far). This value of the widely watched 50 – day simple moving average (the 50 – day SMA is about the same as the 10 – week, but because of holidays, not quite) on Tuesday was $2.368, the week’s high was $2.385 (which was also the low of 03/15 ). The converging conventional and moving average resistance was way too much for the prompt gas to get through on the first try, particularly given that volume was falling (Monday 545,000 (which was less than during Friday’s reversal day volume of 563,000. ), On Tuesday , the day of the high, the volume clocked 377,800, but the 20 – day SMA showed up as support. Recovery from the now flattening moving average support left the prompt higher in four of five trading days, the gap still open and with the highest weekly close of five.

The recent two week rally does not signify the end of the bear market, but it is becoming easier to see the construction of a short – term base since the middle of March on the continuation chart. Substantial downside momentum that had built during the precipitous decline from the December high seemed to be exhausted when prompt gas rallied 50+% from the February low closing not far off the month’s high, Typically, that is about as positive as price action gets after trading a very significant low with a momentum divergence.

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First Test Fails

Daily Continuous

Prices tested the near term resistance around the 50 day SMA but could not muster the strength to break through. Then on the storage release yesterday prices declined, but came no where near the support strength area around $2.00. Are bias’s starting to move?

Major Support:$2.12, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.36, $2.836, $3.00, $3.536, 3.595

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Different Tune This Week

Daily Continuous

Change of pace yesterday as prices maintained strength for the 2nd day in a row, which is a different tune that has played on previous Mondays. The rally could not close above the key resistance area which infers a lack of buyers to push through that resistance area. Perhaps, or it may just need more commitment. Perhaps the storage report this week will support trade, varying from recent weeks. Am traveling tomorrow and there will be no Daily on Thursday.

Major Support:$2.12, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.36, $2.836, $3.00, $3.536, 3.595

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Seen This Before

Daily Continuous

Been and seen this Monday behavior before only to spend the next two days pounding the gains going into the storage release. Is this run different?– only because it set a new recent high and came close to the 50 Day SMA which has not been sniffed since December. Time will tell if the rally can break above the commonly watched level.

Major Support:$2.12, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.36, $2.836, $3.00, $3.536, 3.595

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Short Covering Rally at the End

Daily Continuation

After challenging the low, prices seemed to just run out of sellers and showed a solid short covering rally at during the day and at the end. They opened a little stronger last night but no major move as the declines may have hit a vacuum last week but are unlikely over. Perhaps they challenge the high side of the recent range ($2.24-$2.38) before starting additional declines.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.12-$2.184, $2.36, $2.836, $3.00, $3.536, 3.595

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Sellers Running Thin?

Weekly Continuous

Despite an bearish outside week reversal to the downside, selling sufficient to drive the prompt through the lower extreme of the narrow zone did not materialize. The the failure to extend the decline (the low was $1.946) toward the September ’20 low ($1.795) triggered a short covering rally that left May $.103 higher for the week.  That recovery from a test of such obvious and critical, support is a pretty good indication that at least for the near term May may start to look like it is running out of sellers. Technical improvement was also evidenced by the highest volume week since last since last September. Mentioning in previous analysis that weekly volume has been on balance declining since just prior to the February low and suggesting that selling pressure has been starting to dissipate. In addition, total open interest declined 38,702 contracts–the largest one week decline in the total of contracts outstanding since the beginning of the collapse from the August high.

Last week does not “announce” a trend change but rather a potential of a shift. This market’s declines are not “over” and buying dips (on a limited scale) may turn out profitable over time. If prompt gas is able to remain “inside” the March extremes during calendar April and end the calendar month higher than it began ($2.085-which stands to be possible given a boost by June’s current premium over May ($2.305 v$2.114), aggressive sellers may start to re-evaluate their beliefs.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.12-$2.184, $2.36, $2.836, $3.00, $3.536, 3.595

So Close — But a Rally At The End

Daily Continuous

Price action was so close to closing below $2.00 but failed on the day but who knows with tomorrow. A slight gain at the end of the trading day kept prices above that level for now– the bears are scavengers so expect additional declines.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.12-$2.184, $2.38, $2.836, $3.00, $3.536, 3.595

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Took An Extra Day But Results Expected

Daily Continuous

The declines discussed on Monday took an extra day to occur but sure enough — just in time for storage the market is back at support with the report looming. Discussed the fact that there is little or nothing that makes current market bullish in the Weekly– so lets see how low do we go this time.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support:
Major Resistance $2.12-$2.184, $2.38, $2.836, $3.00, $3.536, 3.595

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