Natural gas formed lower highs and found support around $4.015, creating a descending triangle pattern on its 1-hour chart. Price is bouncing off the bottom and could be due for another test of resistance around $4.100.

This lines up with the 100 SMA dynamic resistance, which is above the 200 SMA to suggest that the path of least resistance is to the upside. In other words, there’s a chance that the triangle top might be broken, triggering a rally that could last by the same height as the chart formation.

Stochastic has some room to climb before reaching the overbought zone to reflect exhaustion among buyers. RSI is treading sideways to indicate consolidation, barely offering strong directional clues at the moment.

Natural gas might be in for some downside if the Department of Energy reports a build of 47 Bcf in stockpiles after the earlier 13 Bcf increase. This would reflect weaker demand or a supply glut, as forecasts of slightly milder weather could sap purchases of the cooling commodity.

Still, a smaller than expected increase or a surprise draw might be enough to draw natural gas bulls out and lead to a bullish triangle breakout.

However, the Energy Information Administration projects inventories of natural gas will reach 3.59 Bcf by November, which marks the beginning of the winter heating season. This would be 159 Bcf below its previous five-year average, indicating elevated supply levels.

Major swings in market sentiment could impact commodity price action since this is typically driven by investors’ appetite for risk. Earlier on, the downbeat US CPI report spurred risk-taking since weaker price pressures could ensure that the central bank won’t be reducing stimulus anytime soon.

US producer prices data is up for release today, but this might not have a strong impact on sentiment.