Author: Willis Bennett

Not a significant change in perspective from last week when I wrote the following… When trade remains within the range traded during a previous period (whether days, weeks, or months) important support and resistance has been defined (as it has over the last few weeks, the longer the period the more important those levels are.  As mentioned previously, violation of either of the new extremes is usually a trigger for influential traders (speculative hedge funds) who have been and remain significantly net short the gas market. Trade through the April high (this week’s first close over the continuation 10 – week SMA as well as the 50 – day) since the week ending 12/16/22, suggests is the far more likely of the near term directional outcomes.

Last week the trade expanded the June lows into the continuation lows of previous periods before finding support. Don’t have a lot to add from a technical side other than it remains in the range environment and should be traded accordingly.

June fell back to test April’s final day high $2.274) before rallying through the resistance that had limited prompt gas last week and before May’s decline in expiration.  June’s recovery left it with the highest close since March 10^th and notably over the continuation 10 – week SMA, for the first time since the week of the December high.  The continuation chart shows a constructive “outside” week with a close above last week’s high.  Despite the relative show of strength after May was off the board June failed just short of the high that it traded a week ago ($2.529 vs$2.543) and for a second week at resistance bracketing its February low ($2.468).  June ended the week just about where it began ($2.410 vs $2.395) but did manage a third straight higher close…the first back to back to back higher weekly closes since the first three Fridays of last July.  The zone of resistance between $2.468 – $2.543 and June’s 10 – week (currently $2.604 and declining) is likely to be a formidable barrier to extending the rally particularly given that volume fell again this week.

When trade remains within the range traded during a previous period (whether days, weeks, or months) important support and resistance has been defined (as it has over the last few weeks, the longer the period the more important those levels are.  As mentioned previously, violation of either of the new extremes is usually a trigger for influential traders (speculative hedge funds) who have been and remain significantly net short the gas market. Trade through the April high (this week’s first close over the continuation 10 – week SMA as well as the 50 – day) since the week ending 12/16/22, suggests is the far more likely of the near term directional outcomes. This will likely extend the rally toward the March recovery high ($2.674, 03/14).

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.