Natural gas continues to trade sideways, with price finding support around $3.650 and resistance around $4.015. Price just made a strong bounce off the bottom of the range and is headed back to the top.

If resistance holds again, natural gas could slump back to the range support or attempt to break lower. 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. However, price is already trading above the 100 SMA as an early indication of bullish pressure.

RSI is on middle ground to reflect consolidation, barely offering any directional clues at the moment. Stochastic is also treading sideways but appears to be pointing higher to suggest a comeback in bullish pressure.

If resistance breaks, natural gas could climb by the same height as the range pattern. Similarly a break lower could be followed by a selloff of the same size.

Natural gas could be in for more gains based on market fundamentals, as seasonal demand is likely to pick up around this time of the year. Although supply has also been trying to keep up with purchases, even lower temperatures could lead to a much stronger boost in demand than expected.

The previous inventory report revealed a draw of 55 Bcf, close to the estimated reduction of 54 Bcf. Another large reduction for the week could confirm that demand remains elevated now that winter season has set in. Also note that stockpiles might have been depleted due to stronger export levels to countries undergoing winter with low natural gas supplies.

A surprise build, on the other hand, could mean that producers are ramping up output to prepare for much colder weather.