Natural gas could be in for a reversal from its slide as price is forming an inverted head and shoulders on its 1-hour chart. Price is still testing the neckline resistance around $3.950.

A break above this level could set off a climb that’s at least the same height as the chart pattern, which spans around $0.200. However, technical indicators are suggesting that the selloff could carry on.

The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that resistance is more likely to hold than to break. Then again, natural gas is trading above both indicators as an early signal of bullish pressure. The gap between the moving averages is narrowing to reflect weakening bearish momentum as well.

Stochastic is in the overbought zone to signal exhaustion among buyers, so turning lower would mean that sellers are taking over. If that’s the case, natural gas could slide back down to the lows around $3.750.

RSI also looks ready to move down without reaching the overbought area, hinting that sellers are eager to return.

Natural gas was previously under downside pressure when weather agencies predicted milder temperatures in the weeks ahead, hinting at an end to the seasonal demand for cooling commodities.

However, recent models suggested that another pickup in temperatures is to be expected, likely keeping purchases afloat in the coming weeks. This might be enough to lead to another draw in stockpiles if supply has been unable to keep up with the rising demand.

Still, market sentiment seems to be favoring safer holdings versus higher-yielding assets like commodities. After all, the FOMC minutes suggested that the central bank could reduce stimulus by the end of the year.

More clarity on this could be found in the upcoming Jackson Hole Summit, as market watchers will be on the lookout for policy hints from Fed head Powell.