In a move strikingly similar to Monday’s price action, the natural gas futures market rebounded modestly from early lows Tuesday. And while the session-long march higher was unable to overcome the dramatic early-session price weakness, it serves as additional evidence natural gas has not yet seen its winter high.

The January and February contracts moved lower almost in lock-step, tumbling 20.7 and 20.5 cents to close at $6.747 and $6.786 respectively. For the second straight session, the front months managed to close near the top of their daily trading range, despite back-to-back declines of more than 20 cents.

At 63,953, estimated volume was weak for the second-straight session, an indication bears lack conviction in their price outlook. On Monday, volume was a scant 57,693 and market-watchers found it especially surprising that a volume of only 71,666 traded last Thursday on the heels of the EIA storage report. The decline in volumes might have something to do with the excessive volatility of recent weeks, which has been noted in calls for congressional investigations, and which has led some analysts to advise clients to watch from the sidelines until the market settles down (see Daily GPI, Dec. 15).

Tuesday’s down-then-up price action was a result of the push and pull between fundamental bearishness and technical buoyancy. According to the latest six- to 10-day forecast released by the National Weather Service, above-normal temperatures are predicted across roughly 75% of the country through Dec. 26. In fact, only the southern states from Texas eastward, as well as the state of Maine (which would be cold regardless) are likely to see normal mercury readings. Below-normal temperatures, meanwhile, are confined to South Texas and southern Florida (which will be warm regardless).

However, that price-negative weather outlook ran into more than a little resistance Tuesday, as traders turned their sights to chart formations suggesting a near-term bottom may be in place. Citing the up-down-up corrective pattern consistent with Elliot Wave analysis, Craig Coberly of GSC Energy in Atlanta eyes potential levels of short-run support. “This ‘down’ portion should be rather short-lived and is likely to remain above $6.36. If this ‘down’ unfolds in textbook fashion, $6.54 is the likely objective,” he wrote in a note to customers Tuesday.

Looking ahead, Coberly feels it is unlikely the impending “up” stage will exceed the spike high at $7.55. Instead, he calculates upside objectives confluent with Fibonacci retracement levels at $7.10 and $7.30.

Tom Saal and Ed Kennedy of Miami-based Commercial Brokerage Corp agree with Coberly’s assessment and look for opportunities to sell rallies based on predefined Fibonacci levels.

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