Natural gas is trending lower on its 1-hour time frame as it trades inside a short-term falling channel. Price is back to testing the channel top and might be due for another dip to the bottom at $3.550.

However, technical indicators are giving mixed signals. The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that resistance is more likely to break than to hold. Price is also trading above both moving averages, so these could hold as dynamic support on dips.

Stochastic is indicating overbought conditions or exhaustion among buyers, so turning lower would mean that sellers are returning. RSI is hovering close to the overbought area to signal potential exhaustion among buyers as well.

If the channel resistance at $3.700 holds, natural gas could slide back to the support at the mid-channel area of interest that lines up with the 100 SMA around $3.625.

Natural gas could still enjoy strong upside pressure due to seasonal factors, though, as warmer weather boosts demand for cooling commodities. Forecasts of even higher temperatures in the weeks ahead could keep purchases of natural gas supported.

The upcoming inventory data from the Department of Energy would likely determine where the commodity is headed in the near-term.

Another large draw in stockpiles could bring more upside for the commodity, possibly leading to a break past the channel top and a steeper climb. A build, on the other hand, might signal that demand is feeble or that producers ramped up supply.

The upcoming FOMC minutes might also be worth keeping tabs on when trading commodities, as any shift in risk sentiment on account of policy expectations could impact demand for these higher-yielding assets. A hawkish bias among committee members could bring downside pressure for riskier assets since it would mean higher borrowing costs soon.