Author: Willis Bennett

Additional Weakness Continues

Daily Continuous

Price action continued its bearish seek of the low end of the trading range yesterday and seems to be seeking the low end of the range for the upcoming period. While there is some variation as history rhymes, prompt gas continues to follow the pattern of the spring/early summer of ’23. A year ago, prompt gas traded the May high on 05/19 at $2.685: this year at $2.924 on 05/23. The early June ‘23 seasonal low traded on 06/01 while this year on 05/29. The June ‘23 – Q2 high traded on 06/28…about $.15 higher than the May high ($2.839…after which expiring July faded to go off the board at $2.603). So far, the June ’24 high has traded $.235 higher than the May high. I am always startled by how a commodity like natural gas seems to follow some of its historical traits. Let the low range become defined as the fundamental input is well established.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.944, $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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Market Extends Declines Low End to Range

Daily Continuous

Expected some strength at the end of last week but got further weakness that extended the declines. Was expecting weakness but thought it would come this week. Now were going to develop the low end of the range that will likely carry through the July 4th historically weak period.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.944, $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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Q2 Run May Have Materialized

Weekly Continuous

The seven week rally that began following May expiration, has left the gas market severely overbought and delivering multiple clues that suggest the spring rally has run its course. The decline in open interest is one of those clues. Higher price highs without increasing open interest indicating new buying support entering the market, is a form of divergence.

Higher price highs accompanied by lower volume is another (occurring the last couple of weeks) is one that has proved exceptionally reliable over the years. During week ending 05/24 3,387,217 contracts changed hands, this past week a higher high traded with 3,075,538. The high of $3.159 may not be the Q2 high but there is a growing body of technical evidence that will be hard for the market to overcome including in addition to the foregoing:

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A Break Below — Mild Response

Daily Continuous

Prices broke below the $3.00 area but the response was rather moot. We may very well be developing a range for prices to trade the month with in. The next week should confirm that with a retracement upward today followed by declines next week. What do I call that — on yea — consolidation.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.944, $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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Support Continues to Hold

Daily Continuous

For the second consecutive day, prices tested and held the support (old resistance) zone at $3.00. The storage report will likely provide yet another test today. The longer the zone holds the stronger it will get — so we will have to watch the zone over the next week. History tells us that the current price levels and the June (calendar) high may provide some relief for these tests.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $3.00, $2.944, $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $3.00, $3.16

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Prices Rally –Support at Breakout Holds

Daily Continuous

Prices continued the gains from the close of Monday and set a new continuous high for natural gas. From the bullish standpoint the holding of support at old resistance ($3.00) a bullish development. From the bearish position the $3.00 level will need to break with a follow down to $2.84.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.844, $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.94, $2.97, $3.00, $3.16

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Failure At Resistance — Failure Near Support

Daily Continuous

The run extended yesterday morning, setting a new recent high at $3.096, before serious selling took prices down, well below $3.00. From there, the market showed resilience as a rally into the close. From the close prices are still trading higher in the after-market back above $3.00. From the technical position — the action is consolidating whether the move above $3.00 will hold as support in the long run.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.844, $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.94, $2.97, $3.00, $3.16

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Challenging Levels Not Seen For Months

Price closed above resistance level trend line (discussed in the Weekly section) and are challenging levels not seen since Jan at $3.00. Last week’s reversal of a reversal (also discussed in the Weekly) signals that the historical strength in prices during Jun is evident again in ’24. Sent out the historical chart last week and would advise using some of the averages in your analysis. For now its time to watch and see how the $3.00 level is handled.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.844, $2.64, $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.94, $2.97, $3.00, $3.16

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A Weekly Reversal of a Reversal

Weekly Continuation

Spoke a couple of weeks ago about Natural Gas’ tendency to define a bias shift as the price changes direction at a support or resistance area and reverse direction on a high volume week. Now we get a reversal higher last week, from and area that had supported the market previously (just below $2.50) and then found support. The lows of last week were just above the 40week SMA, before finding the bid and running upward to end the week over the downward sloping trend line (from the Nov ’23 high and Jan ’24 highs) that had held the market for the first 6 months of the year.

Volume during the last week was high, averaging 574,278 contracts per day. This was significantly higher than the previous week, but well short of the previous reversal week which averaged over 663,000 contracts per day. Similar to the previous reversal week- open interest declined slightly last week. The reversal last week left prices in the extreme over-bought zone for the Weekly RSI but not the Daily RSI, signalling a slight divergence.

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Storage Release Creates Decline — Only to Reverse

Daily Continuous

Early morning strength gave way to selling on the storage data release, then the market spent the late morning rally back to develop a gain. Play the historical tendencies here.

Major Support:, $1.595, $1.52-$1.511, $1.481, $1.312
Minor Support : $2.448, $2.168, $2.12, $2.00, $1.967- $1.94
Major Resistance: $2.844, $2.94

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