Completing a week of wild roller-coaster ups and downs before basically returning to where it had begun the week, the May natural gas futures contract on Friday streaked higher to close the day at $4.070, up 16.1 cents from Thursday’s close but 1.6 cents less than the previous week’s finish.

Traders were nursing a fair amount of whiplash from the week’s action, which saw steep declines and hearty rebounds. However, the one thing a number of traders agreed on was that the $3.810 low on April 1 could mark the end of the road for the bears’ run.

“Friday’s upswing pretty much confirms our earlier belief that the last $3.820 test was likely the end of the worst round of selling,” said a Washington, DC-based broker. “I suspect that the $3.820 price level gets a little more stable as we’ve likely seen the completion of the three-wave down in Elliott Wave Theory, which is the worst wave in a five-wave move. Right now I feel we’re in the midst of a correction where we rally and give some back again, then repeat.”

The $3.820 price level is seen as important because it represents a 61.8% retracement of the September-to-January move higher from $2.409 to $6.108. Some traders believe a meaningful breach of the price level could open the door to last year’s $2.409 low.

“If $3.820 holds, then I think that starts to look like a nice intermediate bottom,” the broker added. “Our first target on the bounce was $4.250 followed by $4.550. The fact that we rallied on a Friday following the selling we had earlier in the week, I think we’ll see some chop in the immediate term before eventually moving into a new bullish phase.”

Despite nothing really supportive on the fundamental front, the broker noted that’s the way the futures market tends to work. “Bull and bear moves begin when there are no obvious reasons for them to start,” he said. “This is the way things happen. You have to remember the futures market is based on what might happen down the road. We are in a shoulder season and the market is looking ahead. Sure we have storage injections coming in, but the market is looking months ahead to summer usage, the hurricane season and the EIA-914 production revision. These are the types of things the market is pricing in now.”

Market technicians weren’t completely sold on Thursday’s 11-cent decline on news of a larger than expected 31 Bcf storage injection. While Thursday’s settlement of the May contract at $3.909 did take out a key retracement point at $3.922 and pointed to a downside objective of $3.522, the break was not decisive.

Economy watchers weren’t fazed by Thursday’s release of weekly unemployment claims by the Labor Department. Expectations had been for 435,000 new claims, but the actual figure came in at 460,000, indicating a still-soft job market. Observers cited the Easter Holiday as being a distortion and anticipated that upcoming reports would show seasonal volatility. The good news is that the downtrend in weekly claims remains intact; a year ago weekly claims were running upwards of 600,000.

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