Natural gas resumed its climb after testing the descending channel resistance on its 1-hour chart. Price is now closing in on the channel bottom but pulling back up.

The mid-channel area of interest might be enough to keep gains in check, possibly sending price back down to the support around $3.750. A larger pullback could last until the channel top that lines up with the 100 SMA dynamic resistance.

On the subject of moving averages, the 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside. In other words, the downtrend is more likely to resume than to reverse. The gap between the moving averages is widening to reflect strengthening selling pressure.

Stochastic is on the move up to show that buyers have the upper hand while exhausted sellers are taking a break. RSI is also turning higher after dipping into the oversold region, confirming that bullish momentum is about to pick up.

A break past the channel top around $3.900 might set off a reversal from the slide.

Risk aversion seems to be gripping financial markets these days, as the snap lockdown in New Zealand has reminded traders of the impact of the pandemic. At the same time, geopolitical tensions in the Middle East are also weighing on investors’ appetite for risk.

A smaller build in inventories is eyed at 28 Bcf versus the earlier 49 Bcf gain, likely as demand remained supported by warmer temperatures all over the US. An even smaller increase or a surprise draw might mean plenty of upside for the cooling commodity.

Still, weather agencies are giving mixed forecasts for the weeks ahead, suggesting that the seasonal pickup in natural gas purchases might come to an end. A larger build would confirm that demand has peaked, likely weighing on the commodity price.