After pushing higher but failing to fill in a key gap on thedaily chart, the March contract sifted lower yesterday as tradersset their sights on stubborn support in the $5.62 area. As it turnsout, $5.62 was little more than a speed bump as prices dippedeasily below that level in a post-AGA sell-off. The March contractwas hit the hardest, tumbling 50.1 cents to close at $5.518.

Traders were quick to point the market’s inability to trade upto the top of the $5.86-$6.12 chart gap created by Monday’s loweropen as a reason for the early price failure yesterday. Afteropening at $6.01, the March contract moved convincingly higherduring the first half-hour of trading, but could not get above$6.08. From that point forward the price direction was a bears’dream as prices checked lower throughout the rest of the session.

According to the American Gas Association, 95 Bcf was pulledfrom underground storage facilities last week, reducing working gasinventories to 1,041 Bcf or 32% full. While the withdrawal figurefell significantly short of the 158 Bcf seen last year, it was justabout in the middle of the 75-110 Bcf range of expectations.Neutral or not, prices continued lower in the last 70 minutes oftrading, breaking beneath support that has held on multipleoccasions.

However, no sooner had the market broken support at $5.62, thenmarket watchers had focused on the next potential bottom. Known astrend 2000 because it has supported prices since Jan. 3, 2000, theupward sloping trendline has been a technical trader’s dream overthe past 13 and a half months. Each time the market has tested thislevel, prices have rebounded higher. Currently the trendline isseen as support at about $5.17 and the slope of the line is alittle more than a penny a day.

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