The August Nymex contract may have taken a significant steptoward posting further losses on Friday, but the jury on that isstill out. After August fell below major support at $2.32 Friday,enough buyers stepped in to prevent the spot month from moving anylower than $2.30. That enabled August to settle the day down 4.0cents to $2.309, but more selling could be in store when tradingresumes today. “I think a lot of traders took off early Fridayafternoon, or were simply not interested in putting in fresh openpositions before the weekend,” an analyst commented.
With all those traders back in tow today, the market may seereaction to August’s settle below the $2.32 neckline of thehead-and-shoulders trading formation that has been forming the lastfew weeks. According to the Pegasus Econometrics Group of New York,Friday’s trading activity “puts all of the buyers over the last 13sessions out of the money and should trigger long liquidation. Wesee failed support at $2.25 as the next stop in the near term, butwith intermediate term potential to work its way lower.”
The aforementioned analyst further noted that the weeklytechnical chart is flashing several sell signals, while theNational Weather Service is calling for below normal temperaturesin the key gas consuming Southern states this week. Plus, if pricesfall below the 40-day moving average [which is currently $2.233],expect even more selling by funds.
August currently has immediate support marked by the short termup trendline in the $2.29-30 area, a technician told GPI. He placesresistance for August at $2.365, followed by $2.43.
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