Natural gas has formed lower highs and found support at $2.317, creating a descending triangle on its daily chart. Price is on its way to test the triangle bottom, so another bounce might be due.

The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that support is more likely to hold than to break. In that case, natural gas might bounce back up to the triangle top around $2.600 from there.

However, price is breaking below the 100 SMA dynamic inflection point as an early indicator of selling pressure. The gap between the indicators also appears to be narrowing, reflecting slower bullish momentum.

Stochastic is heading south, so natural gas price could follow suit as sellers hold the upper hand. The oscillator is nearing the oversold region, though, so exhaustion among sellers might follow soon. RSI is also on the move down to reflect the presence of bearish pressure.

A break in either direction could be followed by a rally or selloff that’s the same height as the triangle formation, which spans close to $1.000.

Natural gas prices are inching lower ahead of the release of the inventory report from the Department of Energy as traders might be keen on reducing their exposure. A small drop in stockpiles is expected, but the lack of cooler weather conditions likely weighed on demand for the heating commodity in the past weeks.

According to the National Oceanic Atmospheric Administration, the weather is expected to be warmer than normal throughout the mid-west for the next 6-10 and 8-14 days. The latest weather models showed some variability mixing in over the next couple of weeks, as Bespoke Weather Services sees the pattern turning warmer than normal moving into early February.