Natural gas has been on a tear but could encounter some sellers as it approaches a long-term area of interest. Price has made it to the top of the descending channel on the monthly time frame.

If this keeps gains in check, natural gas could slide back to the mid-channel area of interest around $3.000 or back to the bottom of the channel. Technical indicators are suggesting that the long-term selloff could resume.

The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside. Also, the 200 SMA lines up with the channel resistance around $4.000 to add to its strength as a ceiling.

A break past the channel top, on the other hand, could mean that a reversal from the long-term slide is in order.

Stochastic is indicating overbought conditions or exhaustion among buyers, so turning lower would mean that sellers are returning. The oscillator has plenty of room to move south before reaching the oversold area.

Natural gas is enjoying strong support, as analysts predict that the latest round of weather disturbances might lead to supply disruptions. In turn, this could spur a draw in inventories if demand remains strong.

Keep in mind, though, that weather forecasts have been mixed in the past week. A large build in stockpiles as reported by the Department of Energy might bring in losses for the commodity while another draw could extend the rallies.

Market sentiment would likely push commodity prices around as well, especially with the NFP report due. Traders are expecting to see slower hiring in August, which would underscore the Fed’s “dovish taper” plans and bring more gains for riskier assets like commodities.

An upside surprise, on the other hand, might continue to fuel tightening hopes and the prospect of higher borrowing costs could drag natural gas prices lower.