Natural gas formed lower highs and found support at the $3.870 area, creating a descending triangle pattern on its hourly time frame. Price bounced off the resistance once more and might be due for a dip to the bottom.

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. Price also seems to be dipping below the dynamic inflection points at the moving averages as an early indication of bearish pressure.

Stochastic is turning higher to show that bullish momentum might return, as buyers take over while sellers take a break. In that case, natural gas could attempt a break above the triangle top around the $4.000 major psychological mark, followed by a rally of the same height as the chart pattern.

Natural gas continues to stay supported, despite the pickup in risk aversion in the financial markets, as warmer weather could keep seasonal demand strong. Forecasts of even higher temperatures in the coming weeks could mean more purchases of the heating commodity.

The latest storage report from the Department of Energy showed a smaller than expected build of 36 Bcf versus the estimated 41 Bcf increase and the earlier gain of 49 Bcf.

Risk appetite would likely impact commodity price action throughout the week, especially with the NFP report coming up. Forecasts are for a slightly faster pace of hiring growth in July, although business and consumer activity may have slowed due to Delta variant concerns.

Analysts are expecting to see a gain of 895K in employment for the month versus the earlier 850K increase, so a downside surprise would be dollar bearish and likely positive for higher-yielding assets like commodities. After all, the FOMC reiterated that they’d like to see more evidence of hiring growth before reducing stimulus.