Natural Gas Technical Analysis

The natural gas markets have rallied significantly during the course of the trading session on Friday, as we have broken above the $3 level, at least initially. That being said, there is a massive amount of resistance above as we had formed a double top back in June, so it’ll be interesting to see if we can get above there. The Relative Strength Index is in an overbought condition, so that also comes into the picture, but really when I look at this, the thing that I would pay the most attention to isn’t even on the chart. It’s the hurricane that just ripped through the Gulf of Mexico area.

The question is, did that damage and slow down production enough to drive prices higher? Probably in the short term, but I do recognize that we are getting much closer to the end of this run than we were at the beginning. I took profit yesterday, I’m okay with that. I don’t have any reason to chase this. If we break out to the upside, so be it, I’ll wave goodbye to the trend. Ultimately though, I do think we are about to hit a bit of a brick wall when it comes to resistance, and I think in that environment, you have to be very cautious.