The August Nymex contract probed lower yesterday but managed torebound before the close, bringing an end the price slide sincelast Thursday’s $2.425 high. Tuesday’s choppy trade left the spotmonth up 1.7 cents at $2.226 on the day. Despite the tight tradingrange and modest gain posted for the day, the session was anythingbut uneventful. Estimated volume confirmed the active market with53,327 contracts changing hands.

Sources contacted by NGI were nearly unanimous in their focus onTuesday. All eyes were on coincidence of the 40-day moving averageand a key retracement level at $2.23 which drew the line dividingthe bears and bulls. A break below this level would help to confirmthe continuance of the downtrend while a move higher would favor abounce back to downtrend resistance at $2.38.

Tom Saal of Pioneer Futures in Miami advised the best way tolook at this market was in terms of what it did and didn’t dotoday. The market flirted with the 40-day moving average for mostof the day and we did manage to move below it. However, the marketdidn’t follow-through and we moved higher on the close. In the lastfew months whenever the spot month approached the 40-day movingaverage, it has blown through it. The fact the market was unable toaccomplish that today could lead to some near term short-covering,he said.

A move higher could be limited by aforementioned resistance at$2.38. Minor support exists at today’s $2.21 low followed bysupport at the low from June 10 of $1.945.

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