After failing to punch through Wednesday’s $6.80 low earlyyesterday, natural gas futures shuffled higher Thursday as traderscovered shorts following a five-day price slide. Over that period,the February contract lost nearly $3 or 30% of its value to closeat $6.909 Wednesday afternoon. February closed at $7.136 yesterday,up 22.7 cents for the session.

Many traders entered yesterday’s futures session with await-and-see attitude. While bulls were unwilling to bet againstthe ongoing price slide, bears were hesitant to continue to sellinto a market that was primed for a technical correction. Although22 cents following a $3 price erosion hardly constitutes “abounce,” New York-based IFR Pegasus, believes prices may have moreroom to the upside. “We see minor resistance to such a rally…..,reaching $7.50 and $7.94. Fibonacci retracements from Wednesday’slow now range from the $8.00 area through $8.73 if the market canget there.” Accordingly, the group is looking to use a $7.55 buystop establish a 50% long position basis February. They will limittheir exposure to the downside with a sell stop placed just underrecent lows.

However, in order for Pegasus to get filled, the market willneed to get past some potentially bearish news on the weatherfront. According to the latest six- to 10-day forecast released bythe National Weather Service, the entire eastern half of thecountry except coastal Carolinas, Georgia and Florida is expectedto see above normal temperatures though Jan. 28. Meanwhile theNWS’s eight to 14-day outlook does not bode much better for skiers,ice fishers and Nymex bulls, as above-normal temperatures areexpected to stick around through at least Feb. 1.

With little in the way of fresh fundamental updates expected untilnext week, technicals will likely take center stage Friday. Supportfor February exists at prior lows of $6.80-83 and then again at thebottom of the chart gap down to $6.65. Check back with https://intelligencepress.comfor intra-day updates.

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