Natural gas could be in for a reversal from its uptrend, as price formed a double top on its 4-hour chart and is breaking below the neckline. Technical indicators, however, suggest that the uptrend might still resume.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support is more likely to hold than to break. Price is closing in on the 200 SMA dynamic inflection point, which might keep losses in check.

Stochastic is dipping into the oversold region to indicate exhaustion among sellers, so turning higher would signal that buyers are taking over. RSI is also approaching oversold conditions to show that bears could take a break soon.

If so, natural gas might still recover to the highs around $4.200. Otherwise, price could slide by the same height as the double top or around $0.200 to $3.800 or lower.

Natural gas is pausing from its rallies as weather models are predicting milder temperatures in the coming weeks, possibly weighing on demand for cooling commodities.

The latest inventory report from the Department of Energy indicated that stockpiles increased by 49 Bcf, higher than the projected 47 Bcf gain and the earlier 13 Bcf increase. This confirms speculations that purchases are slowing on account of higher temperatures.

Mixed forecasts of weather conditions might also keep natural gas gains in check, as this would confirm that the seasonal summer boost for the commodity might be over. It would take a few more months before the next seasonal pickup in demand, which is likely to come during winter when purchases of heating commodities increase.

Still, the EIA predicts lower natural gas inventories in the winter, which might be enough to keep prices supported as temperatures drop.

The Energy Information Administration projects U.S. inventories of natural gas will reach 3,592 billion cubic feet (Bcf) by November 1, which is 159 Bcf below its previous five-year average.