Natural gas could be ready to advance on its reversal as price has completed the retest of the broken trend line resistance on the 4-hour time frame. Buyers are likely setting their sights on the Fibonacci extension levels as the next upside targets.

The 38.2% level is around $2.810 then the 50% level lines up with the swing high at $2.886. Stronger bullish momentum could take it to the 61.8% Fib at $2.962 or the 76.4% level at $3.056. The full extension is near the $3.200 major psychological mark.

The 100 SMA already crossed above the 200 SMA to indicate that the path of least resistance is to the upside or that the reversal is likely to gain traction. Price is also finding dynamic support at the moving averages, which line up with the area of interest at the broken trend line.

Stochastic is turning higher from the oversold region to show that buyers are taking over while sellers take a break. RSI appears to be on the move down to show that bears still have the upper hand, but the oscillator seems ready to turn higher as well.

Natural gas prices took hits earlier on as weather agencies predicted warmer than usual temperatures around this time of the year. Keep in mind that the commodity is counting on a pickup in demand for heating supplies during this winter season.

Risk sentiment is also playing a key role in natural gas direction these days, as optimism for the vaccine rollout might keep traders hungry for higher-yielding assets like commodities. A return in risk-off flows on renewed lockdown concerns, on the other hand, could sap demand for natural gas.

The upcoming inventory report should provide additional volatility for natural gas since it would provide a better picture of supply and demand conditions. A draw in stockpiles should be enough to keep the commodity supported.