Some expectations that proved correct was that if August traded through its February low ($2.207) the next support level would be the zone between the March and April highs ($2.009 – $2.092, the January low, $2.037, is also within that zone). It did not take long. Each day’s decline was supported by increasing volume and open interest as August began the test of the same zone that was repeatedly tested during the early spring of ’23 (and had failed to hold during a similar time frame earlier this year). Before a modest recovery, the highest volume since the June high accompanied the lowest trade since May 3rd, and the lowest close since May 2nd.
Clearly, the gas market is in the grips of its traditional Q3 decline (which has carried further faster than suggested here). From the June high prompts July then August have fallen as much as $1.144 from the June 11th Q2 ’24 high (36.2%). Friday’s close was almost exactly 61.8% (Fibonacci) retracement of the rally from the March low to the June high and a prompt contract was back below the 20 – week SMA for the first time since May expiration. From the “expiration” gap that followed May expiration…when the rally really began, to the June high took seven weeks. Over the last six weeks prompt gas has erased all but about a dime of that rally, and the gap is still open between $1.848 – $1.913.
