Natural gas recently busted through a falling trend line on its 1-hour chart to signal that a short-term reversal is underway. Price might still retest the broken trend line to gather more bullish energy.
Applying the Fibonacci retracement tool shows that the 61.8% level lines up with this former resistance which might now hold as support. Price is already testing the 50% Fib that lines up with the 100 SMA dynamic inflection point and an area of interest.
On the subject of moving averages, the 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to pick up. However, the gap between the indicators is narrowing to reflect slowing bearish pressure.
Stochastic has also reached the oversold region to signal exhaustion among sellers, but the oscillator has yet to turn higher to suggest that buyers are taking over. RSI has some room to head south before reaching the oversold region but appears to be bottoming out to suggest weakening selling pressure.
Turning higher could indicate a return in bullish momentum that might be enough to take natural gas back up to the swing high at $2.966 or higher.
Natural gas could enjoy a bit more upside as the Department of Energy is slated to report another draw in stockpiles. This time, the reduction could be 149 Bcf, smaller than the previous 338 Bcf draw. A larger than expected drop could be even more bullish for the commodity while a surprise build could spur losses.
Note that production has been dampened by the cold weather in parts of the US, leading to lower supply levels. Then again, even with demand for heating commodities picking up, some purchases had not been filled also due to extreme weather conditions.