Despite a lower open and crumbling cash market values, naturalgas bulls fought their way higher on Friday as February pricesmoved above a key momentum number on technician’s charts. TheFebruary contract spent most of day trimming losses incurred duringthe overnight Access session, which paved the way for a lateshort-covering rally. The prompt month finished the day at $7.256,down 1.4 cents for the session but well above its $7.10 openingmark.

Natural gas bears had their pick of bearish news from which tochoose Friday. In addition to the increasingly bearish storagescenario that looks to take hold over the next couple of weeks,mild weather forecasts and lower cash market prices were alsopotentially negative factors. Cash prices tumbled 30 cents or moreat many market locations Friday, amid forecasts for warmingtemperatures over the weekend and early this week.

Meanwhile, the extended outlook calls for more of the same.According to the latest eight- to 14-day forecast released Fridayby the National Weather Service, above-normal temperatures areexpected for a large area of the country, extending from theCalifornia-Nevada border clear across to Wisconsin, Illinois,Arkansas, and East Texas. Normal temperatures, meanwhile, areforecast for much of the rest of the country, with the onlybelow-normal readings seen in Florida and along the coast ofGeorgia and South Carolina.

However, the most bearish of fundamentals can be overlooked ifthe right combination of constructive technical factors manifestsitself, and Friday was proof of that. After watching February’sbrief foray down to the $7.00 area, local trader Ira Hochman wasimpressed by the market’s ability to forge its way higher Fridayafternoon.

In addition to being a key psychological level, the $7.00 levelwas significant because it was the level at which February wastrading when the storage report was released Wednesday, Hochmansaid. “Since that time the market has moved higher and come backdown to test support. Once that held, the next level became $7.14,which represents a key momentum number on the daily charts. If weare able to remain above $7.14, I look for us to retest the $7.40level,” he said.

In daily technicals, resistance for February exists at theunfilled chart gap between $7.40-41. Above that level, additionalselling will be seen at the short-term down-sloping trend line,which for Friday came in at about $7.60. Support is seen at theaforementioned $7.00 level and then again at $6.80. The Februarycontract expires at 3:10 p.m. (ET) Monday.

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