Category: Weekly Detail

November Develops A Possible Range

Weekly Continuous

Discussed the large premium last week on the expiration of the October contract and rather than immediately build on that exceptional premium, the new prompt began the week by opening lower, $3.149 vs last week’s close at $3.206, still a premium of $.314 to October settlement. After fading to $3.133(narrowing the weekly continuation gap that extends down to $2.968), November rallied to test well – defined resistance at the top of a trading range that has confined it since mid – August. Although volume was nothing to write home about the prompt overcame resistance presented by its 50 – day SMA, then multiple weekly and daily highs, discussed during the week, and the trend line declining from the continuation March and June highs.

Most of us in the natural gas trading universe thought there were buy orders above that declining resistance. Once through it November spiked all the way to the 40 – week SMA. Wednesday’s close was $3.476, the value of the 200 – day SMA $3.483. There was also a gap between $3.475 and $3.494 and November closed that gap and then some…but could not close above the 200 – day. Instead, a high volume reversal day…with the highest volume since May 20th (an upside reversal day from a higher low that carried through until the June Q2 high).

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Still Negative After All These Months

Weekly Continuous

The expiration process went off as expected staying with in the range that was developed during month. A week ago, the premium awarded to November increased from $.266 to $.302. This week that premium rose to $.371. Nov is always premium over Oct, but a year ago when October went to settlement November was awarded $.160, in ’23$ .135. In both ’23 and ’24 new prompt November rallied–in ’23 to a 10/09 high before returning from where it came from then trading back through the low of its first day as prompt on 10/23. The expiration gap left on 09/28/23 was narrowed but not closed and that would have to wait for calendar November.

There is no technical explanation for this year’s exceptional premium other than November’s continuing ability to hold/close above the lower boundary of a trading range that limited declines from around Memorial Day until then prompt August broke down before going off the board at $3.081…and then limited rallies including at the calendar August and to date September highs. Sometimes extraordinary premium for the prompt – in – waiting is delivering a message…sometimes it isn’t.

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Lower Boundary Tested

Weekly Continuous

Friday’s close for October was the lowest of its tenure as prompt (nearly identical to its close of 08/27, the day September went to settlement ($2.888 v $2.886). During that same period the Q4 strip has gained a penny (now $3.304 v $3.293) This type of trade suggests that while the sponsorship is not present to kick off a traditional Q4 rally, there is sufficient sponsorship for the construction of a base.

During calendar ’25 only the March contract traded a high during the last five trading days of its tenure (January ’25 did as well). March fell from $4.476 to settle at$3.906 (January from $4.010 to $3.644). A couple of months, notably May and September, rallied during their last trading day, but every contract month this year has traded lower (seven of the eight to a new contract low or to test the previous contract low, during the closing days of their tenures as prompt).

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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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