Natural gas broke below support around the $4.800 mark and is pulling up after reaching a low of $4.407. Price could retreat to the areas of interest marked by the Fibonacci retracement tool.

The 38.2% level lines up with the broken support around $4.800 which might hold as resistance. A larger pullback could reach the 50% level near $4.900 and the dynamic inflection points at the moving averages. The 61.8% level just slightly above the $5.000 psychological mark might be the line in the sand for a bearish correction.

The 100 SMA appears to be crossing below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse. However, oscillators are suggesting that a larger correction is underway.

RSI is just halfway through on its move up to the overbought zone, so buyers could stay in control for a bit longer before sellers take over. Stochastic is also heading up to show that bullish pressure is in play.

Natural gas remains under downside pressure as risk appetite took a hit when the focus returned to the pandemic. The confirmation of the WHO that a new variant called Omicron has been detected has prompted some countries to impose travel restrictions again, weighing on business sentiment and commodity demand.

The upcoming inventory report from the Department of Energy could shift market dynamics, though, as a draw in stockpiles might mean upside for the commodity price. After all, export activity to countries experiencing an energy crunch is driving up demand for natural gas, even as output is picking up.

Domestic demand likely remains feeble, though, as falling temperatures have sapped purchases of cooling commodities recently. A large build in inventories would confirm that demand is unable to keep up with the rise in supply, likely bringing more downside for natural gas.