Category: Weekly Detail

Trade Suggests Lower Low for Aug

Weekly Continuous

Soon to expire August, which rallied from last week’s low of $2.823 to$ 2.991, traded back to back tight weekly ranges (last week $.145 from low to high…the tightest weekly range in memory, this week $.160) but was the only contract month to end the week with a loss. The consensus of technical indicators, which remained neutral (with a fluctuating bias) for the entire second calendar quarter, is negative for a second week.

The weekly MACD, our primary “lagging” indicator, which confirmed a negative calculation last week, is negative for a third week. The daily MACD, the daily and weekly RSIs are negative and are not yet giving extremely oversold warnings. Market internals are neutral. Average daily volume fell a little as August traded between support and resistance.

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Operating In Tight Range

Weekly Continuous

After losing $.256 a week ago August closed $.029 lower, while trading a total range for the week of $.145 that may suggest at least a temporary loss of downside momentum. August gas spent six trading days testing the same zone that provided resistance during the first half of May and then support for expiring June just after Memorial Day . Volume during the last five of those six days was lower than the corresponding day the week before…no technical surprise that prompt gas held the support. As a rule, a volume increase is required to overcome the bids at a defined support zone. August traded an outside day reversal on Thursday and posted a low daily close of $2.858…the lowest daily close since then prompt June closed at $2.843 on 05/12. If August was going to breakdown, it missed a good chance, but the sufficient offers clearly were not present.

On a daily closing basis, prompt gas closed between +/- $2.550 and $2.850 for twenty six days between April 1st and May 13th (there was one close higher, three lower during that period). That zone was tested this week…expect it to continue to present daily closing support but also that it will be retested during late July, August and early September. Note that September is currently $.035 discount to August. A year ago on 07/17 September closed $.034 premium.

Following the seasonal pattern during July…and particularly the period bracketing Independence Day, August was expected to trade a low between the 10th and 20th…this week’s low traded on 16th and brought the early July decline to 18% (vs a five years average of 18.9%). While as mentioned in previous editions, there have been years when August faded for its entire tenure as prompt, far more often a post – holiday mid – July low precedes a rally to test resistance. Expect the zone between $3.10 and $3.15 is a likely target before a fade into contract expiration.

A year ago August ’25 traded a temporary oversold, seasonal low on 07/09 and then rallied to retrace a little less than 50% of the decline from the Q2 high, tested similar resistance then failed. Expect seasonal pressure to ebb and flow weighing on the entire maturity curve for another sixty days. The average of the last twenty declines from Q2 highs is 31.6%…which would suggest some likelihood of a test and possible undercut of the April low. Full maturity of the annual cycle will occur in 4 – 5 weeks, or roughly during the last week or so of September’s tenure as prompt…which will also be full maturity of the short – intermediate term cycle measured from the April low. The best guess is that the gas market will feel seasonal pressure into that late August/early September period and the period bracketing Labor Day (which is 09/07 this year).

The consensus of technical indicators, which remained neutral (with a fluctuating bias) for the entire second calendar quarter ended the week negative for the first time since just following the failure at the January high. The weekly MACD, our primary “lagging” indicator, that had remained positive for eight weeks rolled over. The daily MACD and weekly RSI are negative and are not yet giving extremely oversold warnings. Market internals which were neutral with the suggestion of a price negative bias last week improved a little. Average daily volume (which accelerated significantly a week ago as prompt gas fell hard) and the highest since the two weeks leading into and of the week of the March high, dried up as August traded a lower low…a technical positive.

Open interest increased 21,500 contracts as August edged lower…my guess is that increase can be attributed to short sellers getting a little too far out over their skis. Thursday’s total was 1,672,716 total contracts outstanding. The last time open interest was as high, 1,676,152, was week ending 05/29. The time before that, 1,680,104, was the week immediately preceding the January low. Those are the high week ending totals since last October…both accompanied a turn in the market.

Major Support: $2.640-$2.57
Minor Support/Resistance : $2.87-$2.84, $3.16-$3.148, $3.136, $3.02-$2.97
Major Resistance: $3.35, $3.486-$3.494, $3.567, $ 3.736

Storage Release Breaks Old Support

Weekly Continuous

While the support zone between $3.00 and $3.05 had held the market for the previous couple of months, it was no match for the selling that came in after the storage release. Rather than hold that support…and bounce as expected, prompt gas fell to test the continuation post Memorial Day lows ($2.857 – $2.859, 05/26 & 05/27. This year the pre Independence Day high traded on 06/26 at $3.441. The to date post – holiday low is $2.874…a decline of .567 or 16.5%. The five and ten years average of the seasonal declines are 18.9 % and 15.26% so this years market is close to a historical tendency.

While there have been years that prompt August traded steadily lower for all, or almost all, of its tenure as prompt…’24 is the most recent example (and the only example of the last ten years). Far more often August trades a post – holiday low between the 10th and 20th…even in ’24 the low before the three day bounce, before closing the month lower.

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Range Trade Supports a Break Eventually

Weekly Continuous

Prompt gas and the August contract remain confined in an increasingly well – defined trading range between $3.000 – $3.050 and $3.375 – $3.440. Friday’s last trade, $3.245 was just about exactly in the middle of that range, Thursday’s close, $3.196 just south of the middle. Recently discuss the seasonal tendency bracketing Independence Day . Currently, prompt gas has declined .290 from the 06/26 pre -holiday high ($3.441 – $3.151) or about 8.5%. While that percentage decline is greater than the declines in ’19 or ’21 it is well short of the three, five and ten years averages (15.3%, 18.9% and 21.6%, respectively). Typically, August gas continues to feel the seasonal pressure when trading resumes before a post – holiday low most often traded between the 10th and the 20th.

The consensus of technical indicators remains neutral, as it did for the entire second calendar quarter. A close above the 40 – weeks SMA and the March/June highs with supporting volume would trigger positive agreement of the indicators. A close below well – defined support between +/- $3.00 and $3.05 would, at a minimum, introduce a strong price negative bias. The weekly MACD, my primary “lagging” indicator, remained positive. The daily MACD, the weekly and daily RSI are all neutral. Given that since May 28th prompt gas has been confined in daily closing range between $3.087 and $3.343, the neutral configuration of sensitive mathematical indicators makes sense. Market internals are also neutral with the suggestion of a price negative bias. Average daily volume fell by more than 20,000 contracts as prompt August traded in narrow range. Open interest increased 43,000+ contracts…which suggests that commercial hedging may be coming in at a lower price level. The total range traded this week was .177, leaving the weekly ATR at .260…that is more than a nickel lower than the August ’25 low…getting closer to a red flag zone. The daily ATR fell to .135. The violated trend line from the ’24 – ’25 lows should be expected to present resistance…as it has for the last couple of months. The value of the trend line for calendar July is $3.360.

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New Prompt — Same Range — So Far

Weekly Continuation

July has traded the high of its tenure three times in the last ten years just before going to settlement, ’16, ’21 and ’23. Of those three ’23 is most similar to current conditions, but in all three…even in ’21 with prompt gas in a defined uptrend, settlement on the last day of June was $3.373, the calendar August low $3.734. Notwithstanding its well – defined uptrend, the gas market spent most of the summer consolidating before extending a rally into Q4 (in ’23 that high traded during October). July ’26 settled $.191 higher than June ($3.231, the highest settlement since February v $3.040) as expected.

August gas has been range-bound since the last trading day of March…between +/- $3.000 and $3.410 – $3.430. The April and May lows of August gas, $2.974 and $3.001, together with the June low, $3.059 should provide substantial support. Higher monthly lows are technically constructive but expect August to remain confined (with slight expansions due to potential weather implications) in a range similar to July.

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Nothing Technically New

Weekly Continuous

While traveling over the last few days and during the weekend, I realized that there is nothing new about the range and any other aspects of the market so while I have internet while driving — will recommend to play the range.

Major Support: $2.640-$2.57
Minor Support/Resistance : $2.87-$2.84, $3.16-$3.148, $3.136, $3.02-$2.97
Major Resistance: $3.35, $3.486-$3.494, $3.567, $ 3.736

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Not Much To Write

Weekly Continuation

Another quiet week in a market that seems very content to stay in a range. The consensus of technical indicators is neutral. The technical indicators have now been neutral for fifteen of the last sixteen weeks. That’s pretty typical for the consensus during the construction of a trading range. A close above the 40 – weeks SMA with rising supporting volume would trigger positive agreement of the indicators. A close below the trend line rising from the April and May lows would likely result in negative agreement.

The weekly MACD, our primary “lagging” indicator, remained positive while the daily calculation is negative . The weekly RSI is neutral – negative. After stalling at a lower higher ten days ago the daily RSI is neutral. Market internals have been mixed for four straight weeks. Average daily volume was higher as the prompt fell…a technical negative, but on the other side -open interest fell 31,000 + as the prompt fell…a technical positive. Last week the total range traded was about half of the week before. This week that range continued to contract, from .297 to .218. The weekly ATR fell to a lower low .311 v .328. While it has not always been so, that is considered at least neutral. The daily ATR increased from .148 to .153

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Seasonal History Remains

Weekly Continuation

Soon to expire June extended its rally to test the continuation 20 – weeks SMA (and its own 20 – weeks average) before reversing lower from an historically consistent mid – May pre Memorial Day high. In eight of the last ten years that short – term seasonal high traded between the 12th and 23rd. Last year the pre – holiday high printed on the 12th (Memorial Day was the 26th) this year on the 20th (Memorial Day is on the 25th. A lower weekly close…after opening above last week’s high ($2.994 v $2.982) with a volume increase (average daily volume increased nearly 70,000 contracts) and a closing short – term uptrend violation indicates that prompt gas will be offered lower before going off the board on Wednesday. Following June expiration the new prompt almost always falls toward a late May/early June low before a rally (which more often than not peaks either side of 06/15 and can be, historically, more often than not the Q2 high.

There is little reason not to believe that prompt gas is likely to continue to adhere to seasonal patterns/tendencies as it has since the blowoff into February expiration. It has been suggested that gas is in the process of constructing a trading range between +/- $2.50 and $3.25 – $3.50 and may continue for much of the remainder of ’26. Gas may test either side of that range while premiums awarded to deferred and distant deferred contracts diminish.

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Bias Change Receives Some Confirmation

Weekly Continuation

Trade during May is an example of a price supportive seasonality that historically emerges during Q2. Prompt gas had closed above the April high during May in 16 of 20 years. On a continuation basis prompt gas closed below its 50 – day SMA every day since 01/29 (the first day of March’s tenure as prompt)…until Monday 05/11. On Friday the June contract followed suit, closing above its 50 – day for the first time since 03/12.

Although occasionally June rallies into expiration (’18 & ’22), typically during May the prompt trades to a mid – month, pre Memorial Day high. In eight of the last ten years that short – term seasonal high traded between the 12th and 23rd, before a decline through the holiday to an end of May – first week of June low. A year ago the May high traded on 05/12, the post – Memorial Day low was a little earlier than usual, on 05/28 (Memorial Day was the 26th).

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Still Churning

Weekly Continuous

This week looks a lot like last week in terms of technical insights. The consensus of technical indicators remains neutral for the third week, before that it was neutral for seven of eight weeks. Typically, the consensus will remain neutral when prompt gas is attempting to define a trading range, with a bias that fluctuates between positive and negative. Despite incremental improvement there is no discernible bias at present.

Market internals, volume and open interest, were neutral. Both increased with prompt gas little changed for the week. The view is that increased open interest while a short – term trade range is defined suggests accumulation ahead of a Q2 rally.

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