Natural gas is still heading south after its break below the head and shoulders neckline on the 4-hour time frame. Price is consolidating slightly but could have more bearish momentum left.

The 100 SMA is above the 200 SMA, though, which is probably why sellers are hesitating. Then again, the gap between the indicators has narrowed enough to show slowing bullish momentum and a looming crossover. The downtrend could pick up as this happens.

Stochastic is indicating oversold conditions or exhaustion among sellers, so turning higher could bring buying pressure in. If that happens, natural gas could pull back to the broken neckline support around $2.800 to gather more selling energy. RSI is bottoming out and starting to climb from the overbought zone to signal a pickup in buying pressure as well.

A move back above the neckline support, however, could signal a continuation of the longer-term climb.

Natural gas could be in for a slide that’s at least the same height as the chart formation, which spans $2.800 to around $3.200, so the drop could last by around $0.400.

The Department of Energy is set to report a draw of 75 Bcf, lower than the earlier 98 Bcf reduction. This might signal weaker demand or a pickup in supply, as weather conditions have warmed up in the past week. Producers also likely resumed output following winter storms that led to temporary shutdowns.

Bespoke Weather Services said that its mid-range forecast on Monday had shifted a tad cooler from a previous outlook on Friday, with the potential for colder air next week.

Risk-taking would likely impact commodity price action as well, as traders focus on the prospect of additional US government stimulus would likely restore business and consumer activity soon. Vaccination efforts would likely keep risk appetite in play as this would also allow business conditions to resume normal activity earlier.