Overcoming the 50-day moving average and the 50% level at $4.014 could launch another surge into the resistance cluster formed by the 200-day moving average at $4.248 and the intermediate 61.8% retracement level at $4.252. This zone is the last major barrier before the December 5 main top at $5.022.
Short-Covering Rally Faces Test: Can Real Buying Sustain the Momentum?
So far, we’ve been witnessing a massive short-covering rally with some speculative buying. In order to produce a prolonged rally, we’re going to have to see some real buying. This makes the market vulnerable to a pullback into the short-term retracement zone at $3.498 to $3.246.
Cold Snap or Bigger Trend? Traders Weigh Strategic Entry Points
The question traders are asking is: are we facing a cold snap, which means the current rally is going to be a one-and-done event, or is something bigger developing? This will determine whether traders chase this market higher through resistance, or play for a short-term pullback into the support zone.
Twin Winter Storms Drive Heating Demand Sharply Higher
Tuesday’s gains are being fueled by intensifying cold weather that is driving heating demand sharply higher. The surprise cold pattern is being shaped by the alignment of two winter storms.
Dangerous Cold System Targets Texas and Southern States
NatGasWeather explains the current situation this way. Prices are higher after the weekend weather trended “massively” colder since the middle of last week. It is said to be capable of bringing a dangerously cold weather system late this week and into early next week with lows of -20°F to 20s, including 10s to 20s deep into Texas and the South.
In addition to the near-term cold, traders are also watching the February 1-3 period, which has trended colder over the past few days as well.