Natural gas appears to be finding a ceiling at the broken short-term rising trend line, indicating that a continuation of the reversal is underway.

The Fibonacci extension tool shows the levels that sellers might aim for. The 38.2% level is close by at $3.747, then the 50% level is at $3.701. Stronger selling pressure could take natural gas down to the 61.8% level that lines up with the swing low at $3.655. The 76.4% level is near $3.600, then the full extension is at $3.505.

The 100 SMA is crossing above the 200 SMA, though, so the path of least resistance could be to the upside. In other words, there’s still a chance that the uptrend could resume, especially since price seems to be finding some support at the moving averages. A break above the $3.800 resistance could confirm that bulls are regaining control.

RSI has been on the move down but is pulling back up to suggest that buyers are putting up a strong fight. The oscillator has room to climb before reaching the overbought zone to reflect exhaustion again.

Stochastic is also heading north, so natural gas price could follow suit until overbought conditions are met.

Natural gas prices recovered as forecasts of cooler weather are lifting estimates for demand in the coming weeks. The winter season has officially started and, although it is off to a balmy start, analysts continue to expect a pickup in purchases towards the end of the year.

Demand in other parts of the globe like Europe and China are also starting to pick up, and supply remains limited. Exports from the US might be enough to sap domestic stockpiles while producers try to increase output to meet rising purchases down the line.

The upcoming inventory report from the Department of Energy should shed more light on supply and demand conditions in the past week. Analysts expect a draw of 85 Bcf this time.