After carving out an 8.5-cent trading range during the first 50 minutes of trading Tuesday, natural gas futures settled down and chopped lazily sideways for the remainder of the session. The October contract finished at $3.356, down 4.3 cents for the day and just above its $3.34 low. At just 72,545, estimated volume was indicative of a market that is uncertain what forces will impact the natural gas futures market on Sept. 11.
Calling Monday’s 13.4-cent advance a “trend-day,” Tom Saal of Pioneer Futures in Miami was ready for a retracement Tuesday. “If the market opens higher, sell October,” he wrote in a note to customers Tuesday morning. As it turns out, these words were prophetic because shortly after notching a gap higher open, the October contract was hit with a wave of profit-taking that sent prices down to $3.34.
For many traders, the choice to sell Tuesday was an easy one. “With so much uncertainty associated with [Wednesday], nobody wanted to go home long,” a trader told NGI. Nymex will hold a staggered opening Wednesday, with natural gas, crude, copper and platinum futures and options opening at 11 a.m. EDT. Access trading will be unaffected by the delayed start, ending at 9 a.m. EDT.
With little else to go on, market watchers were forced to dig deep into their bag of technical tricks Tuesday. For Tim Evans of IFR Pegasus in New York, this meant calling up a seldom-used chart pattern called Andrew’s Pitchfork. Depicting a three-tined fork pointed toward one-thirty on a clock, Andrew’s is drawn as three trendlines — an upper and lower (in this case drawn at $4.18 and $3.26 for Tuesday’s session), and a median trendline (seen at $3.72 Tuesday). It is this median trendline, which can act as a pivot point, that Evans has his eye on.
“From its mid-range perch, October natural gas could pivot in either direction, with a move beyond the recent $3.445-455 highs carrying the market back into the $3.500-707 range where it topped out on Aug. 27. This would coincide with the [median trendline] of the Andrew’s Pitchfork shown on today’s chart,” he wrote in a note to customers Tuesday. On the other hand, Evans believes that a break under $3.30 would put pressure back on the support line rising through $3.23. Meanwhile, Saal views any weakness as just another buying opportunity.
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