Natural gas continues to cruise lower inside its falling channel on the 1-hour time frame, and price seems to be finding resistance at the mid-channel area of interest.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to pick up than to reverse. The 100 SMA is near the channel resistance at $3.850 to add to its strength as a ceiling.

The gap between the indicators is also widening to reflect strengthening selling pressure. Stochastic is already on the move down, so price could keep following suit until oversold conditions are met. RSI is also heading south to add confirmation that sellers have the upper hand.

In that case, natural gas could be on track to dip to the channel bottom near $3.700 or perhaps break lower.

The Department of Energy is expected to report a build of 28 Bcf in stockpiles, lower than the earlier increase of 49 Bcf. This would reflect a pickup in demand while warmer temperatures have been observed in the past week.

However, weather agencies are giving mixed forecasts, as the end of the summer season draws near. This could be indicative of lower purchases of cooling commodities like natural gas.

A larger build could signal that demand is slowing and might carry on this way in the next few weeks. On the other hand, a smaller increase or a surprise draw might mean even more gains for the commodity.

Take note that overall market sentiment is also pushing commodity prices around, and the FOMC hints on tapering before the end of this year could mean downside for riskier holdings. After all, the prospect of reducing stimulus could put a damper on business and consumer activity.