Natural gas is on a tear after bouncing off the bottom of a freshly-forming rising channel on the 1-hour chart. Price has climbed past the mid-channel area of interest and might be aiming for the resistance.

Technical indicators are giving mixed signals, though. The 100 SMA is above the 200 SMA to signal that the path of least resistance is to the upside or that support is more likely to hold than to break. Price is trading above both moving averages, so these could hold as dynamic support on dips.

However, the gap between the indicators is narrowing to reflect weakening bullish momentum. Stochastic is already indicating overbought conditions as well, so turning lower would mean that sellers are returning.

Similarly RSI has reached the overbought zone to signal exhaustion among buyers. If the commodity price retreats, the channel bottom around $4.000 might still hold as support since it lines up with the moving averages.

Natural gas drew a boost from a smaller than expected build in stockpiles of 29 Bcf versus the estimated increase of 40 Bcf. This is also significantly lower than the earlier increase of 46 Bcf, reflecting stronger demand for the commodity.

Keep in mind that weather forecasts have been mixed in the past week, leading investors to worry that the seasonal pickup in purchases of cooling commodities has peaked. Then again, updated forecasts suggest another rise in temperatures, which could mean more gains for natural gas.

Looking ahead, market sentiment could still push commodities around before the end of the week. All eyes and ears are on Fed head Powell’s speech in the Jackson Hole Symposium, as his remarks on tapering and the future of monetary policy could impact business and consumer sentiment. Any indication that they are about to taper soon might bring risk-off flows back.