Technicals, like a roadmap to a traveler, give natural gasfutures traders important clues as to where the market is takingthem. Although fundamental factors must never be ignored, they arehaving a vastly diminished impact during this low demand “shoulder”period. The April contract rocketed higher Tuesday after gappingabove a key technical level on the charts. April finished thesession at $5.621, up 29.9 cents on the session.

Of all the technical indicators used by chartists, the 40-daymoving average is probably the most ubiquitous, as it is favored byboth commercial and fund traders. Its trading rules are simple: buythe market as prices move above the 40-day moving average and sellthe market as it moves below it. By virtue of its $5.42 openingtrade Tuesday, the April contract gapped above its 40-day movingaverage, which calculated out to $5.36. The market never lookedback, closing just off its $5.63 high for the day.

“Funds were good buyers right from the start [Tuesday],” saidTom Saal, a broker with Miami-based Pioneer Futures. “We put in abreak-away gap higher, and there was no turning back.”

Although impressed by the bulls’ handiwork yesterday, Saal willbe more comfortable endorsing the long side of the market if promptmonth prices can settle for the week at or above support at $5.45.Looking at a weekly continuation chart, he sees a possible “W”bottom formation that will be validated if the May contract canclose above the intervening bottom at $5.45.

“This market has a little bit of wiggle room. May closed at$5.661, which leaves support some 20 cents lower. Cash is alsolagging futures prices. I would not be surprised to see April giveback some of [Tuesday’s] gains on expiration day [Wednesday]. Aslong as May holds above $5.45, we may have put in a bottom,” Saalsaid.

Storage data will be released this afternoon, and expectationsare for a 5 Bcf to a 39 Bcf net withdrawal versus a 28 Bcfwithdrawal a year ago, 23 Bcf last week and 49 Bcf five-yearaverage.

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