Natural gas is starting to trend higher on its 1-hour chart, with price forming higher lows and higher highs inside a rising channel. Price is moving close to the top of the channel and might bounce off the resistance.

The 100 SMA is above the 200 SMA, though, so the path of least resistance is to the upside. In other words, there’s a chance the top of the channel could break and natural gas could stage a steeper uptrend. Price is trading above both moving averages, so these could hold as dynamic support around the middle of the channel on pullbacks.

Stochastic is already indicating overbought conditions or exhaustion among buyers, and turning lower could signal that sellers could return to defend the channel top. RSI has some room to climb, so there could be some buying pressure left.

Natural gas price action could hinge on the upcoming Department of Energy report, which might indicate a draw in stockpiles as temperatures have cooled in the past weeks. Supply constraints may have also weighed on inventories, possibly leading to another leg higher for the commodity.

In the previous week, natural gas inventories fell by 36 Bcf, so a smaller draw is expected for the latest reporting week. Another large reduction might mean a big rally for the commodity while a huge build could push prices back to the nearby support levels.

Risk appetite also seems to be returning now that the cargo ship blockage in the Suez Canal has been refloated. This could ease supply constraints but also lift business optimism, which might have a neutral impact on commodity prices.

Volatility might also pick up as traders book profits ahead of the Holy Week holidays in several nations. It is also the end of the month and quarter, which also means profit-taking among most investors.