Natural gas is still trending higher inside its ascending channel on the 1-hour chart and already found support at the mid-channel area of interest. Price is up to the 38.2% extension and might still be due for further upside momentum.
Price could still head up to the 50% extension that lines up with the swing high around $2.470. Sustained bullish momentum could take it up to the 61.8% level closer to the $2.500 mark or the 78.6% extension at $2.527. The full extension is located at $2.571.
The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the climb is more likely to resume than to reverse. Price is also above the 100 SMA dynamic inflection point so this could keep holding as support.
RSI is heading down to show that selling pressure is returning without even seeing overbought conditions, indicating that sellers are eager to return. Stochastic is also in the overbought zone to show that buyers are exhausted and might be willing to let sellers take over soon.
In that case, price might still retreat to the support around $2.400 mark or until the bottom of the channel around $2.350. This happens to line up with the 200 SMA dynamic support as well.
Based on the EIA Short-Term Energy Outlook report released this week, natural gas could average $2.62 per million British thermal units this year, down 5.5% from the previous forecast. Still, the commodity seems undeterred from its climb as risk appetite has been in play.
Production remains elevated, so price could experience some downside pressure as the release of the latest inventory report draws near. Keep in mind that demand has been subdued on account of warmer weather conditions across the US which could persist for at least a couple more months.