Natural gas has made a couple of failed attempts to break below the $2.300 support level and found resistance around $2.800, creating a double bottom reversal pattern.

Price has yet to test the neckline and break above it to confirm that a reversal is in order. If that happens, natural gas could climb by the same height as the chart formation. Technical indicators, however, suggest that the downtrend could carry on.

For one, the 100 SMA is still below the 200 SMA to indicate that the path of least resistance is to the downside. Stochastic is turning lower after reaching the overbought zone to reflect exhaustion among buyers. RSI is also pointing down to signal a pickup in selling pressure that might take natural gas to the lows again.

Price has climbed above both moving averages as an early indication of bullish pressure, though, so these could hold as dynamic support on dips. Also, the gap between the indicators is narrowing to reflect weakening bearish momentum and a potential bullish crossover.

Natural gas is enjoying some upside on risk appetite and cooling weather conditions. The latter could spur stronger demand for heating commodities in the coming months while weather disturbances might keep supply in check.

The upcoming inventory report should provide clearer insights on supply and demand conditions. A draw in stockpiles could confirm that demand remains strong while a build might suggest that oversupply is a concern.

Stimulus from the US government is also lifting market optimism as many expect business and consumer spending to stay afloat amid the pandemic. Although fears of another strain of the virus are in play, vaccine distribution is making up for these concerns.

The FOMC minutes and NFP release later in the week would likely impact overall market sentiment and commodity price action as well.