Natural gas continues to trend lower as it found resistance on the falling trend line visible on its 1-hour chart. Price could be setting its sights on the next downside targets marked by the Fibonacci extension tool.

The 38.2% level is close by at the $2.514 mark that lines up with the swing low. Stronger selling pressure could take it down to the 50% extension at $2.485 or the 61.8% Fib at $2.456. The 76.4% level is at $2.421 then the full extension is at $2.364.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is likely to gain traction. The 100 SMA lines up with the trend line to add to its strength as resistance in the event of a pullback.

Stochastic is turning lower again after pulling up from a brief dip to the oversold region. This suggests that seller aren’t quite done yet and could take natural gas further south. RSI is also on the move down, so the commodity price could follow suit while bearish momentum is in play.

Natural gas could enjoy more volatility during the release of the Department of Energy’s inventory report, as it is expected to show a draw of 21 Bcf. This would be lower compared to the earlier reduction of 52 Bcf but a draw nonetheless, indicating sustained demand and a possible drop in supply.

A larger than expected draw could be bullish for natural gas while a surprise build could mean more losses.

Temperatures remain cool in most parts of the US, although there have been reports of warmer than expected weather. This likely dampened demand for the heating commodity in the past week.

Risk aversion might also be hurting natural gas price gains, along with weakening optimism about vaccination efforts and the impact of the latest stimulus package on overall growth.