The Nov/Jan Natural gas calendar spread has been in a -.364 to -.453 balance bracket for the last few weeks. Mondays range is within Friday’s range, making that an “Inside Day.” Many profitable trades begin with a break from balance, such as an “Inside day.” The -.429 to -.434 gap in between Thursday’s range and Friday’s range is also an important reference. Also, there is a -.406 resistance level above.
Additionally, the spread has found support near the -453 balance bracket low five times in the last 11 trading days. The more the market tests a certain support/resistance reference, the weaker that reference level gets.
BE PREPARED FOR A BREAK
If the market breaks from the INSIDE DAY to the downside, the first reference will be the -435 balance bracket low. If the market gains acceptance below that -.453 balance bracket low, a significant move to the downside may follow.
If the market breaks from the INSIDE DAY to the upside, the first reference is the -.429 to -.434 gap. If the market gains acceptance above that gap, the next upside reference is the -406 resistance level.
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