Brokers and speculators (at least some, anyway) may havebreathed a collective sigh of relief on Wednesday, as volatilityreturned to the New York Mercantile Exchange. The April contractfinally broke out of the tight $2.105-205 trading range that hadbeen containing its movements since March 6 by virtue of its 8.4cent rise to $2.239. Sources agreed the activity was led byanticipatory buying ahead of the release of the latest AGA storagereport. “It was more buy based on rumor today, but the rumor wasstrong enough to drive April above major resistance at $2.205,” oneof the sources told NGI.
Perhaps more important is that April settled above both itsmajor resistance level and its 40-day moving average of $2.223.”Both of those things typically lead to buying by fund groups, andbecause they came into the day decidedly net short, that alreadyhad the incentive to buy,” the source continued.
April received a second shot in the arm during last night’sAccess trading, following the actual release of the storage data.The latest weekly withdrawal estimate of 143 Bcf was well aboveindustry expectations of 70-100 Bcf., which helped April riseanother 3.1 cents to $2.270 by 4:15 EST. However, a Chicago areamarketer warns buyers not to be too greedy. “This thing will test$2.30, but you’d be a fool not to sell that. Funds sold the Marchcontract heavily each time it tested that level last month, andsince April isn’t that much different from March in terms offundamentals, it stands to reason funds will do so again. That’sthe nature of technical analysis. Keep trading a pattern the sameway until the pattern stops,” he said.
If April does manage to break resistance at $2.30, look forsecondary resistance at $2.355, a chartist advised.
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