Resistance levels of Natural Gas
Natural Gas has been in a major downtrend since last year's bull rally. We can see that prices have topped out around $15.00 last year and then headed lower, consolidating around the $6-$7 level. Going forward, if a rally becomes evident, we can expect prices to rise to higher levels. Based on Fibonacci retracement levels, 8.921 (38.2%), 9.987 (50%), and 11.054 (61.8%) would be the resistance levels at which sales should occur. To back up a rally, we could see the CCI has broken through it's moving average (bullish), and RSI seems to be gaining a little ground.

Why would this market break out? As we just entered hurricane season which expects to bring a few storms that could do damage, the main emphasis would be another storm hitting the Gulf coast. This region is a hotbed for the natural gas market, pipelines, and refineries. As Hurricane Katrina damaged the reason, we saw prices of Natural Gas explode to the $15.00 level. Another one could have the same effect.

Also, keep any eye out on the inventory number which is due out this Thursday (tomorrow). The heat waves from the last couple of weeks should have an impact on the draw down from inventories. This would lead to price spikes and should rally the market. However, beware the fact that recent weather predictions for the nation have been modest for the next couple of weeks. This could give ample time to resupply the lost inventory, thus leading to lower than expected rally prices.  ¶ 5:46:00 PM