Reply #4: Natural Gas Jan 05 - Liquidation Continues

[RawMaterials]

http://futures.fxstreet.com/Futures/content/101090/content.asp?menu=commodities

Natural Gas Jan 05 - Liquidation Continues
Support: 7.20, 7.00, 6.50
Resistance: 8.20, 8.34, 8.80
5-Day Ave. Range: 0.37 ($3700 per contract)

Gas remains under pressure as long liquidation continues. Open interest has dropped 12,763 contracts between Oct-26 and Nov-19. While the market is very weak technically, January (F) gas often shows a blip of strength in late November (and sometimes much more than a blip) before weakening again into late December. Traders should begin thinking about price levels where buying interest might be found, even if such buying turns out to be only temporary.

There are two downside support levels that interest us. The first one is 7.20, representing the approximate June high (blue dotted line). The second one is psychological round number support at 7.00, which also happens to be a fibonacci extension of the Oct-13 and Oct-27 up leg.

- Look to cover or reduce shorts on signs of support between 7.20 and 7.00 with the intention of re-establishing shorts on a bounce. A break of 7.00 would be very bearish.