Formed when one day’s high is lower than an adjoining day’s low,chart gaps are a technical feature that garner plenty of marketattention. And over the last two weeks, natural gas traders havedone just that; attempting to fill the more than dime void leftbetween the $2.305 low from Dec. 30 and the $2.20 high from Jan. 4.Each day since then, they have steadily chipped away at the gap bymaking higher highs in each of the last seven trading sessions.That set the stage last Friday. Would the futures market crumbleunder the weight of sagging holiday weekend demand, or continuehigher to plug the hole up to $2.305? That question was answeredsuccinctly Friday morning when buyers, armed with fresh weatherforecasts and propelled by stop-loss buying, bid the Februarycontract 7 cents higher to a $2.322 close.

For Ira Hochman of New York-based Trot Trading Corp. the slowgrind higher over the last two weeks was only natural for a marketcoming off such a violent move lower. “There were some buy signalstriggered above $2.145 and the market just kept inching higher fromthere and formed a nice rising wedge formation. Once the $2.28 wasbreached again [Friday] the market was an easy buy.”

Easy buy or not, technicals were not solely to blame for themarket’s strength. After receiving snow Thursday, the winds kickedup and temperatures dipped across key Northeast gas markets Friday.And those temperatures are a harbinger of things to come, insistsChief Meteorologist Jim Rouiller of Omaha-based Strategic WeatherServices. His forecast, which is based on a blend of European andCanadian medium range modeling, calls for temperatures from theUpper Midwest eastward to moderate slightly early this week, thenturn colder at least through Monday, Jan. 24. In addition to thereturn of cold temperatures, Rouiller believes the possibilityexists for a substantial winter storm for the Northeast urbanizedcorridor beginning Tuesday night.

And while Hochman agreed it had turned “frigid” in the Big Applelate last week, he insists key technical components are in placefor the market to add to its recent advances. “Now all [the market]needs is a wide consolidation phase that will confirm the $2.125 asa double bottom. As long as February stays above the $2.20 level,that should be possible.” The first bottom was made back on Dec. 7at $2.23 and it is not uncommon for the second bottom to be thelower of the two, he explained.

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