Natural gas found support at the area of interest at the top of the short-term range visible on the 1-hour time frame. Price is closing in on the upside targets marked by the Fibonacci extension tool.
The 38.2% level is close by at $3.127 then the 50% level is at $3.148, which is also the swing high. Stronger bullish pressure could take natural gas up to the 61.8% level at $3.168 or the 76.4% level at $3.192. The full extension is at $3.232.
The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support is more likely to hold than to break. However, the gap between the indicators is narrowing to reflect slower bullish momentum.
Stochastic is also indicating overbought conditions or exhaustion among buyers. Turning lower would mean that sellers are returning and could take natural gas back down to nearby support levels.
RSI has a bit more room to climb before reaching the overbought area to signal that buyers need a break.
Natural gas could draw support from evidence of stronger demand for the cooling commodity. After all, summer months are rolling in, lifting temperatures all over the US.
Sustained risk-taking could also favor commodities like natural gas, as traders are pricing in a longer period of stimulus from the Fed. Note that the latest jobs figures turned out below expectations, and the upcoming CPI release might also influence tightening forecasts and overall market sentiment.
The Department of Energy is slated to print a build of 99 Bcf in stockpiles, slightly higher than the earlier 98 Bcf increase. This would be indicative of a dip in demand, although a smaller than expected build could mean more upside for the commodity.
A larger than expected build, on the other hand, could mean downside for natural gas as this could signal elevated supply as well.