Category: Weekly Detail

Negative Bias Reinforced

Weekly Continuation

The October contract spent ten trading days (from 08/25 until 09/08) running upstream against the seasonal current of price negative including multiple tests of the continuation 50 – day SMA. as discussed in the Daily last week, the prompt managed one daily close above the closely watched declining moving average, the highest daily close for a prompt contract since 07/22. The violation of the declining resistance was not confirmed by higher trade or volume (also discussed) and did not induce the expected short covering extension of the rally from the August low. Then the prompt provided a significant fade into this week’s close.

The failure of October ’25 to generate the sponsorship to extend the rally was different that the pattern of October ’24, when prompt gas closed above the 50 – day and rallied to record the high of its tenure as prompt on the day it went to settlement. The reversal from a higher high with a significant increase in volume, my rough calculation of average daily volume increased more than 75,000 contracts, along with increasing open interest as the prompt fell should be considered a technical negative. The October contract closed back within the range traded during the reversal from the August low (week ending 08/29). The range that week was $2.622 – $3.023 with 2,201,283 contracts traded. This week’s estimated volume was 2,577,0000. This is a strong suggestion that support deeper within that prior week’s range will be tested.

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Similar to Recent Months Trade Begins Defining Range

Weekly Continuous

Although working against the current of seasonal price negative bias, until fading on Friday October gas had closed higher for eight straight days (it has been a while since any contract did that). For the holiday shortened trading week the prompt was the only contract to gain, + $.051, but November’s loss was negligible, $.005. The other ten months of the one year strip lost $.035 to $.071.

The price level attracting sellers was obvious…the declining 50 – day SMA. The highs of three of this week’s four trading days were within a penny of the gradually falling moving average. Interestingly enough, the continuation 50 – day SMA was an influence then as it was during the past week, once breached it became support for a rally that extended through October ‘24’s last trading day. Last year, following October ‘24s rally into expiration new prompt November gas up the gains and returned to test the 50 – day before December kicked off the real Q4/Q1 rally that finally peaked on March 10th.

The consensus of technical indications, which began to improve last week, improved enough to be rate neutral – negative after remaining negative for nine weeks. A week ago neither volume nor open interest confirmed lower lows…this week average daily volume and open interest increased along with October. Prompt gas reversed from more than two standard deviations below the 20 – week. This week’s higher trade tends to confirm that reversal. The daily ATR increased a little…from $.126 to .$131. The weekly ATR fell to $.380. The moderation of volatility may become a significant technical factor.

Major Support: $3.00-$2.97, $2.843, $2.727, $2.648
Minor Support :
Major Resistance: $3.061, $3.16, $3.192, $3.25-$3.31,$3.39, $3.62, $4.168, $4.461,

Can October Keep Its MoJo

Weekly Continuous

Prompt gas traded a semi – classic “outside” week reversal from a new low for 2025, ”semi”, because the reversal came with lower volume than a week ago.

A classic weekly reversal (market’s preferred method of signaling that an unsustainable low (or high) has traded, trades with volume greater than any recent week. The absence of higher volume during the past week suggests that while a significant low is likely in place it is also likely some testing will be required to confirm that low. The reversal was particularly noteworthy because it came without a significant contribution from premium awarded to the new prompt. When September went off October was awarded only $.019, suggesting little sentiment for any kind of rally. A year ago October was awarded $.117 premium and ultimately rallied through Labor Day and to trade the high of its tenure as prompt the day it went off the board. This week’s low traded almost exactly on the anniversary of the Q3 ’24 low (08/25 v 08/28).

The new prompt closed back above the weekly trend line violated a week ago, and above the value for calendar August for the monthly trend line ($2.997 v $2.978). Notwithstanding that lack of confirmation, last week’s violation still suggests that the uptrend is vulnerable.

Basic technical analysis suggests that once a well – defined trend line is violated the price objective becomes the next readily identifiable trend line. In this case that is the trend line declining from the March and June highs . On a continuation basis the current value of the declining resistance is $3.553, falling about $.055/ week. On the October chart the value is $3.495 falling about .07/week.

October rallied from $2.735 to $3.029, closing higher each day of the past week. It has been a while since gas closed higher for five days (prompt gas for four). It is likely that the rally days resulted from an oversold condition and minor short covering. Open interest did fall modestly this week (price up, open interest down means short covering was a contributor) but it was also an expiration week (when the last holdouts in an expiring contract balance their books).

The test is going to be whether buyers continue to bid up October when trading resumes. Resistance is plentiful, beginning not far above Friday’s close and then there is the early September price negative seasonality discussed previously. If, October can extend its rally despite that negativity then it will begin to look like October ‘24s tenure.

A year ago after the August low October suffered only a minor setback after Labor Day then continued to rally setting the high of its tenure on the day it went to settlement. Prompt November did give up most of the gains but traded a higher low and then Q4/Q1 rally, lasting until March, began.

Neither volume nor open interest confirmed lower lows with the Bollinger Bands study showing prices more than two standard deviations below the 20 – week SMA. Momentum indicators began to moderate with the primary “leading” indicator turning up without reaching extremely oversold conditions, but it seems the most significant technical factor is the absence of volatility. The average range of the last fifteen days has fallen as low as .121 (08/26). A year ago one day ahead of the August Q3 low the daily ATR was .112.

Major Support: $2.843, $2.727, $2.648
Minor Support :
Major Resistance:$2.97-$2.99-$3.00, $3.061, $3.16, $3.192, $3.25-$3.31,$3.39, $3.62, $4.168, $4.461,

Expect Further Declines

Weekly Continuous

The collapse continued last week as prices extended the declines though some support trend lines and previous month lows. The violated trend line now becomes ascending resistance, as the dominant near term technical factor. Given soon to expire September’s weakness into the week’s close the trend line is likely to contain any near term short covering rally as well as any early sponsorship for October (which closed at $2.800, $.122 premium to September and also below the coming week’s value of the trend line). Given the violations of trend line support during the last two weeks and prompt gas entering the seasonally weak period during the coming week (Labor Day falls on September 1st this year), the upside prospects for the expiring contract and new prompt October seem low.

Historically, the days leading into and following Labor Day has been one of the most consistently price negative periods all year. Since I first noticed the tendency, declines were and continued to be consistently in double digits. When they weren’t (which was rare) I learned from history, that when the markets that fail to decline when they are supposed to (based on historical norms) are likely going to go up and less than average declines tend to precede robust Q4/Q1 rallies. In ’23 the decline was 12.5%. The entire Q4 rally was a little more than a dollar counting the premiums awarded to the November and December contracts. The Q4 peaked on 10/31/31 at $3.630, 70% higher than the pre Labor Day low. A year ago the Labor Day decline was short and measured only 7.4%. During the period that immediately followed (about three weeks) prompts October and November rallied $.894. You might remember that the rally that began from the pre Labor Day low was not exhausted until early March with the prompt price 164% higher.

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Not Sure if Q3 Low Is In

Weekly Continuous

September plunged through the conventional support zone and closed below both on Tuesday with a significant increase in volume, oddly though the prompt recovered. The extension of the decline to close at $2.808, the lowest daily close since November 14th, below definable support with the highest volume since 07/23 had the earmarks of a decline that would be extended lower– Huh – volume, although still higher than average began to dry up, and the ranges traded during the two days following the new low close were less than a dime. The restricted ranges and the closes near the highs were clear suggestions that the enthusiasm of Tuesday’s sellers had, substantially diminished.

There is still a lot of negative seasonality ahead, including the period bracketing Labor Day that will be the primary focus of the next Week’s, but a weekly reversal (the close for the week was higher than the open after trading a lower low) with increased volume, to hold the trend line feels like a rejection of lower prices. The determining factor will be whether the trend line declining from the June and July highs (currently $2.980) continues to guide prompt gas lower or a will it be violated and trigger a short covering rally to test some of the plentiful resistance between $3.20 and $3.50.

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Likely To Be Important Week for Bias

Weekly Continuous

Rather than my expected recovery (prompt gas typically rallies from a late July/early August low) September continued to find substantial selling between $3.100 and $3.150 (the highs of the last seven trading days have been within that zone and with the exception of a downside reversal day on 7/30 ($3.186) since 07/24. Fading from that band of resistance September traded through the calendar July low ( not particularly unusual, it has now done so in 14 of the last 20 years), but then posted the lowest daily closing price since last November ($2.823, 11/15).

The recovery from Monday’s low of $2.895 (the lowest low since prompt May was about to go to settlement) left the first suggestion of a momentum divergence that we’ve seen during the decline from the June Q2 high. A reversal from the high of that recovery (08/07, $3.148) suggests that September has not yet developed the sponsorship for the expected seasonal “correction”.

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A Market Needing Stimulus

Weekly Continuation

August extended its decline, trading just through $3 before going off the board at $3.081, the lowest contract month settlement since November ’24 at $2.437. To close out calendar July, new prompt September undercut the pre-expiration low by a penny before reversing higher. On a continuation basis prompt gas closed lower for the fifth time over the six weeks. While the open and close numbers are not exact, prompt gas ended the week near where it began when trading resumed ($3.083 v $3.093). That’s close to but not a textbook doji, but it is close. This pattern can suggest some measure of exhaustion for the downtrend that has now extended $1.176 or 28.4% from the 06/20 failed test of the April high. While the downtrend may be temporarily exhausted seasonal pressure almost certainly isn’t.

An early August rally is typical of September’s tenure as prompt followed by a fade into expiration. In ’24 September peaked on 08/15 at $2.301 after rallying from a post – August expiration low of $1.882 then retreated to exactly test the July low of $1.856 (hard to believe that the July and August lows were identical) before recovering to go off the board at $1.930. That rare, perfect “double bottom” has never been retested. Do not expect history to repeat itself but a similar pattern with different levels may occur.

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Going To Keep Testing Lows

Weekly Continuous

The weight of the seasonal pressure that has been discussed and warned about since before the rally to the June Q2 high, fell on soon to expire August. A year ago, the seasonal descent was more orderly after the June Q2 ’24 high (week ending 06/14) prompt gas declined for six of seven weeks (falling from $3.159 to $1.856, or 41.2%). At the time the weekly ATR was .324. By the time a rally began to gain momentum, following an August test of the July low, the ATR had fallen to .268.

This is another example in natural gas that history does not repeat itself, but some times it rhymes. Since the June ’25 Q2 high (week ending 06/20, a few days after the anniversary of the high) the decline has been far more erratic. Just last week August closed at its highs gaining $.125(and was well – bid in the aftermarket. Volatility, still elevated by historic standards, is $.466/dt/week (+/- 40% higher).

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Trade Looks to the Low Side of August Range

Weekly Continuous

This week’s report is going to be short as I am taking my dog to the emergency vet service. Over the history of August contracts there have been a few that the late summer contract rallied for most of its tenure and was bid into expiration, ‘21 and ’22 are the most recent examples. In both of those years prompt gas set a calendar August high before falling. There have been a few that steadily weakened, ’17 and ’18 are examples. In both of those years prompt gas made a late July/early August low before a significant rally.

More often than not, August follows a pattern of trading a post – 4th low, a mid – July high followed by weakening to a low either side of 7/23 – 7/25.Look for August ’25 is conforming to that seasonal pattern. The 07/09 undercut of the June low ($3.199 on 06/26 ) was on far and away highest volume traded since then.

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Expectations Met

Weekly Continuous

I wrote last week —The expectation was the decline to occur on either 07/07 or 08. Instead, August fell $.458 (12.2%) on 06/30 and 07/01…closing the gap and trading just through the low of the first targeted support band ($3.300 – $3.350). Well the declines continued to July 9th and promptly met the expectations for the size of the declines (in fact exceeded them). Once the low was set, prices bounced and returned to with in the range for the July contract and now seemingly the August contract. Folks, this market seems to being going nowhere and at a slow pace.

Understanding the frustration of many of you (for volatility– myself included) but my ideas are to highlight what I see the market is trying to accomplish and clue you in advance of the movement– unfortunately this market is showing no movement beyond the range each successive contract trades within. There may be an occasional lapse in Daily diatribes during these periods.

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