Natural gas fell below its rising trend line support to signal that a short-term reversal might be underway. Technical indicators, however, are suggesting that bulls might still return.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that the climb is more likely to resume. However, the gap between the moving averages has narrowed to reflect weaker bullish momentum and a potential bearish crossover. Natural gas is also trading below both indicators, so these could hold as dynamic resistance.

Stochastic is already indicating oversold conditions or exhaustion among sellers, so turning higher could mean a return in bullish momentum. RSI is also in the oversold region to suggest that bears could use a break. In that case, natural gas might still be able to climb back above the trend line to resume the uptrend.

The Department of Energy reported a larger than expected draw of 134 Bcf in stockpiles of natural gas, reflecting strong demand. Analysts had expected to see a reduction of 129 Bcf versus the earlier drop of 130 Bcf.

However, the disappearing cold front is leading weather forecasters to predict warmer than anticipated temperatures, possibly weighing on purchases of heating commodities down the line.

The EIA also predicted that production is likely to ramp up this year as producers anticipate stronger demand on the reopening of economies. This might keep a lid on prices in the near-term, especially if businesses and consumers don’t readily ramp up purchases just yet.

Meanwhile, risk sentiment could dictate whether natural gas can sustain its climb or go for a reversal in the next few days. Risk-off flows might sap demand for commodities and other higher-yielding assets while a continuation of risk-taking on account of vaccine rollouts could shore up natural gas prices.