Daily Call

Bias Change

Weekly Continuous

I have been dancing around the potential of a bias change occurring the gas market for a couple of weeks with the series of higher lows over the last two months, volume increasing on the positive trade days, increase in open interest in rallies and the breakout of the resistance zones that have held the market rallies for three months. Some of those elements came to fruition last week with break out above resistance in the high $2.40’s and the ensuing run up to the highs from earlier in Q2 on the continuation charts. Some of the buying was clearly short covering as the resistance areas were penetrated.

With the well defined support zone at $2.00 and below the last three months have provide a consolidation base for the current run. Now the question will be how far does the rally run prior to expiration. May high of $2.685 up to the highs for the July contract at $2.707 to $2.816 will likely provide to much selling for prices to extend much beyond.

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Short Covering Rally Occurs

Daily Continuation

Disscussed in the Weekly section one of the results of breaking the decline trend line of resistance… and that violation triggers a substantial short covering rally…. (occurred yesterday). While that may happen there is also a third option is that prompt gas works its way through the declining trend line of resistance, which adds substantial evidence that a very significant low is in place, rallies for a few days, which it should as some short covering is absorbed. This event would take prompt July to the area around the April high ($2.529), is a likely objective for the July prompt. Little did I know that would occur in three days (primarily one day). Look for prices to consolidated and re-test some of the gains from yesterday.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $2.38-$2.26, $2.17
Major Resistance$2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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No Change

Daily Continuation

No change from yesterday’s publication.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $2.17
Major Resistance$2.413, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Daily Close Above Declining Trend Line

Weekly Continuous with Trend Lines of Support and Resistance

As hypothesized in the Weekly section earlier in the week — a break above the trend line may provide some short covering movement extending prices higher. Would not expect a major covering rally but one that should take prices well above $2.38 and into the $2.40’s. A key will be does the break above hold the Weekly chart– if not then its a false breakout and back to test support.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $2.17
Major Resistance$2.413, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Trend Lines Hold

Daily Continuous

Per the Weekly Section, both of the trend lines (support and resistance) were tested yesterday and both held their importance for near term trade. Today is yet another day.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $2.17
Major Resistance$2.413, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Higher Weekly Close

Daily Continuous

As the headline announced — the action last week left the market at a higher close with the convergence of two trend lines intersecting this week (see Weekly detail). This will likely bring some additional volatility (especially depending on which trend line breaks). Expectations of the outcome are discussed in the Weekly detail.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $2.17
Major Resistance$2.413, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Issues Await

Weekly Continuation

July continued to closely follow the technical/seasonal script previously discussed. After testing the trend line rising from the April/May lows last Thursday and Friday the prompt rose to challenge the short – term trend line declining from the May highs. The falling resistance trend line was too much of a sell signal and ended the rally. July gave up the gain, traded .004 through last week’s close but stopped short of testing the trend line rising from the April/May lows before recovering to close above the trend line resistance. mentioned last week, a close above the short – term trend line would trigger a test of the intermediate – long term trend line falling from the August/November/December highs. The value of that declining resistance for the past week was $2.383 and the high was$2.380. Also suggested was that the prompt’s first challenge of the resistance would fail which it did. July retraced much of the week’s gain but trading a total range of $.207/dt, and remained well “inside” last week’s range.

It will get very interesting this week when prompt July encountered the trend line declining from the Q3 and Q4 ’22 highs and the trend line from the April May lows (chart above). During the coming week the trend line declining from the August/November/December highs will intersect the trend line rising from the April/May lows. This crowding or convergence of the trend lines is not some kind of magic bullet, but both have substantial technical significant importance.

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No Bias Change Indication

Daily Continuous

The storage report provided no bias indication for prices just keeping the price in the recent range. Look for last week’s high at $2.41 to hold the gains and lows for this week have likely been printed.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $2.17
Major Resistance$2.413, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Prices Push Higher

Daily Continuation

I hear from my fundamental folks that the whole reason for the recent gains is due to heat coming at the end of June into July. I apologize for my ignorance– but is the summer not hotter than the spring? What ever– starting to test the near term resistance. Lets see if the fundamental concerns are enough to break above.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $
Major Resistance$2.413, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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Consolidation In a Narrow Range

Daily Continuation

Expanding the lower end of the range slightly, prices stayed in a fairly narrow range during the day. The actions seems to imply that that folks are waiting for some fundamental news event to coordinate the next move bias.

Major Support: $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support: $
Major Resistance$2.413, $2.543-$2.604, $2.836, $3.00, $3.536, 3.595

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