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Prices Destined for Continued Range

Daily Continuous

Daily Continuous

Major Support: $3.013-$2.998, $2.998-$2.983, $2.971, $2.955, $2.903-$2.891

Major Resistance: $3.112-$3.127, $3.198, $3.213-$3.218

Minor Resistance: $3.074, $3.153

It just seems that this market will not leave the well defined range from last June between $3.23 and $2.72.  The declining trend line off of the Jan/May high has presented resistance on the last two rallies and when the market looks its weakest and ready to break below the $2.75 are it catches a bid.  Forecast’s have caused a lot of the inability to extend beyond the range and perhaps we are going to face that situation again.  The weather models are in agreement for the next two weeks being well below average, but the large contingency of trade continues to short the resistance as they have proven to be low risk sales.  Now the shorts have increased their position another 60,000 contracts between Nov 14th and Nov 28th and the position is massive for this time of the year.  These are not reckless because they are bets that the production (which continues to rise in the Northeast) will offset the weather impacts.  My concern with the position is I don’t know what happens if it gets cold enough to effect the production with freeze offs— guess we will find out in the coming weeks.  Technically, sell the declining trend line until a close above and buy the dips until we get a sense of the effects the coming cold will have on production.

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