Natural gas broke above the top of its rising wedge pattern and is stalling around the $3.300 levels. Note that the wedge spans around $0.400 in height so the resulting climb could be of the same size.

Price might be in for a correction to nearby support levels before resuming the climb. The Fibonacci retracement tool shows that the 61.8% level lines up with the broken resistance around $3.150. A shallow pullback could already find buyers at the 38.2% Fib or $3.211 or the 50% level at $3.180.

The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that the climb is more likely to gain traction than to reverse. The gap between the moving averages is widening to reflect stronger bullish momentum.

Stochastic is already indicating overbought conditions, though, so exhausted buyers might take a break and let sellers take over. Similarly RSI has reached the overbought zone and looks ready to turn lower to reflect a pickup in selling pressure.

Natural gas is enjoying strong upside as temperatures have dropped all over the US, and the winter storm is leading to production outages in states like Texas. This simultaneously lifts demand for heating commodities while crippling supply, both of which lead to a boost in prices.

The EIA is projected to report a draw of 250 Bcf in stockpiles for their upcoming report, larger than the earlier week’s reduction. An even bigger drop in inventories might mean more upside for the commodity while a smaller draw could pave the way for a pullback.

Risk appetite also seems to be sustained as traders continue to look forward to more stimulus from governments and central banks. This could boost business and consumer activity, which in turn buoys demand for higher-yielding assets like commodities.