Natural gas is trending lower on its short-term chart as it moves inside a falling channel that’s been holding since the middle of this month. Price is testing support and could be due for a pullback to the resistance next.

The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that support might break. If that happens, natural gas could be in for a steeper decline. The gap between the indicators is widening to reflect strengthening selling pressure as well.

Stochastic is turning higher from the oversold region to indicate a return in bullish momentum. In that case, a pullback to the channel top that lines up with the dynamic resistance at the moving averages around $2.650 could follow.

RSI is hovering close to the oversold region to signal exhaustion among sellers, but the oscillator has yet to turn higher to indicate a return in bullish momentum.

Natural gas has been on weak footing as weather agencies predict warmer than usual temperatures around this time of the year. This could weigh on the expected pickup in demand for heating commodities in the coming weeks.

The upcoming inventory report from the Department of Energy could set the tone for natural gas price action this week, as a draw in stockpiles could reflect sustained demand and lead to a boost in prices. On the other hand, a build in inventories would suggest that supply remains elevated and could stay that way in the near-term.

Risk appetite could also impact natural gas price action, especially since commodity traders are also keeping close tabs on vaccine rollouts and the resurgence in COVID-19 cases coming from the new strain of the virus. Risk-off flows could weigh on natural gas prices.